Written by Dan Green
Dan Green
Dan Green (NMLS 227607) is a licensed mortgage professional who has helped millions of people achieve their American Dream of homeownership. Dan has developed dozens of tools, written thousands of mortgage articles, and recorded hundreds of educational videos. Read more about Dan Green.
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Updated: October 2, 2024
Buying your first home is a major financial milestone, and securing a mortgage pre-approval is a key step. A pre-approval clarifies how much home you can afford and strengthens your position as a serious buyer.
This guide breaks down mortgage pre-approvals, how long they last, how they impact your credit, and the difference between pre-qualification and pre-approval. Whether you’re starting your search or getting ready to make an offer, this guide will help you navigate the process with confidence.
A mortgage pre-approval is when a lender reviews your financial details—such as your credit score, income, and assets—to determine how much home you can afford. It also provides an estimate of your interest rate and monthly payments, allowing you to plan your budget.
Once pre-approved, you’ll receive a pre-approval letter. This letter shows sellers that you’re financially qualified to purchase a home.
According to Freddie Mac, homebuyers who are pre-approved are taken more seriously by sellers and are more likely to have their offers accepted.
Many first-time homebuyers confuse pre-approvals with pre-qualifications. The mortgage terms “pre-qualification” and “pre-approval” are not interchangeable.
A pre-qualification is a mortgage approval based on self-reported information. It doesn’t verify a buyer’s credit score, income, or money in the bank. Pre-qualifications are estimates only.
A pre-approval is mortgage approval based on verified data. It uses credit reports, job data, and bank information to confirm how to approve your loan and for how much money.
Needless to say, pre-approvals are for serious home buyers, and many home buyers choose to get pre-approved before searching for homes. Pre-approvals signal to sellers that you’re a motivated buyer who can afford to buy their home.
A mortgage pre-qualification is an estimate of your ability to borrow money. It’s a shortcut for lenders and buyers to assess whether your mortgage will be approved.
The five questions in a first-time home buyer pre-qualification are:
Home buyers can answer the pre-qualification questions with the truth, lies, or an in-between version. The lender will not verify the information provided nor ask for proof.
Pre-qualifications are unverified estimates of a person’s home-buying power.
The advantage of getting pre-qualified is that it’s quick. The disadvantage is that pre-quals are inaccurate, unhelpful, and set poor expectations – especially for first-time home buyers.
Pre-qualifications are appropriate when buying a home with bad credit or with some other job or credit anomaly.
A mortgage pre-approval verifies that a buyer can purchase and finance a home.
Pre-approvals are reliable. They consider a buyer’s credit, income, and assets; and use that information to approve a mortgage conditionally.
A mortgage pre-approval verifies six things:
With pre-approvals for VA loans, lenders will also verify VA benefits eligibility. For USDA mortgages, they’ll verify USDA property eligibility.
Mortgage pre-approvals use hard credit inquiries and, when digital data is unavailable, lenders verify with W-2s, paystubs, tax returns, and personal bank statements.
When your mortgage is pre-approved, you know exactly how much home you can afford to buy and for what mortgage rate you’re expected to qualify. You’ll also get a verified estimate of your mortgage closing costs and a projection of your monthly payments.
Lastly, pre-approved home buyers receive a pre-approval letter, sometimes called a Verified Approval Letter. A Verified Approval Letter tells home sellers that you, as the buyer, can purchase and finance their home.
| Pre-Approval | Pre-Qualification |
| Verifies income, employment, and credit | Based on self-reported estimates |
| Provides a verified loan amount | Offers an estimate of buying power |
| Accepted by home sellers | Not typically accepted by sellers |
| Strengthens your offer | Weaker signal to sellers |
A pre-approval is the better option for serious buyers. Pre-qualifications may help in the planning stage, but pre-approvals are essential for making an offer.
Generally, pre-approved mortgages are as good as gold and guaranteed to be approved when a final mortgage approval is sought. Pre-approved mortgage applications are rarely denied in underwriting because they are, quite literally, pre-approved.
However, there are reasons why a pre-approved offer may be rescinded, including:
If your credit score falls below the minimum required credit score for approval, your pre-approval could be revoked.
Current minimums by mortgage program are:
If your household income drops or your household debt levels climb, your debt-to-income (DTI) ratio may exceed mortgage approval maximums. Current maximums by mortgage program are:
If your employment type or job title changes, it could affect how your income is calculated on an approval. Even if you get a pay raise, any of the following changes could nullify your mortgage pre-approval:
If you plan to make a career change while buying a home, speak with a mortgage company first to avoid unintended consequences.
Mortgage pre-approvals are a dress rehearsal for a buyer’s final mortgage approval, and use an estimated PITI based on expected purchase price, mortgage rate, and taxes and insurance.
If a buyer purchases a home with larger-than-expected real estate taxes or a condo with higher-than-expected monthly assessments, the new projected payment could exceed the pre-approved amount.
Most mortgage pre-approvals are valid for 90 days.
After 90 days, if you haven’t found a home, your pre-approval will expire. You can easily refresh your pre-approval by contacting your lender and providing updated documents. Learn more about how long a mortgage pre-approval lasts.
Refreshing your pre-approval ensures you’re ready to make a strong offer when the right home comes along.
Getting pre-approved for a mortgage is a quick and straightforward process that can often be completed in minutes on the Homebuyer.com website, or may take longer if you work with a lender by phone.
To get pre-approved, your lender will ask for financial information. Gathering documents in advance will speed up the process – unless you use the Homebuyer.com mortgage application center, which can be entirely document-free.
Evaluate your household budget and decide how much you want to spend each month on housing.
Your housing payment relative to your monthly income is known as your front-end ratio.
Generally, a home buyer with credit card debt and student loans should aim for a front-end ratio not to exceed 35 percent. A home buyer with no other debt can push their front-end ratio higher.
A mortgage pre-approval verifies your household income, bank and retirement assets, and credit history to issue a mock mortgage approval for a home.
Homebuyer.com’s self-serve mortgage approval verifies documentation automatically. For home buyers using a brick-and-mortar mortgage company instead, gathering documentation in advance and storing it in a digital data room is imperative.
A well-built mortgage data room will include all of the following:
If you meet the definition of first-time home buyer, include proof of on-time rental payments for the last 12 months and your landlord’s contact information. Include all applicable agreements if you pay or receive child support or alimony.
Pre-approved buyers get better outcomes than general buyers, and mortgage companies do pre-approvals at no cost and with no obligation. Therefore, you have no reason to skip this important step.
If you don’t know a mortgage company to use or how to get started, talk to a friend for recommendations, ask your real estate agent for referrals, or simply respond to trustworthy online ads. And don’t just stop at one pre-approval.
A famous Freddie Mac study showed that home buyers who talk to two or more mortgage companies save money on their mortgage, so talk to multiple mortgage companies and compare your mortgage choices.
Now that you have a list of mortgage companies to contact, contact them in succession. Use your digital data room to share documentation and speak with a loan officer by phone if that’s your preferred method of communication.
Getting your pre-approval will take a few minutes or a few days, depending on your application method.
The fastest way to get a mortgage pre-approval is to use a self-serve mortgage approval company. Self-serve mortgage applications securely verify, underwrite, and approve your mortgage in real time, 24/7.
Homebuyer.com gives home buyers self-serve mortgage approvals in about five minutes.
The standard method is to give a mortgage application online and upload financial documents to a website. Generally, a loan officer will confirm your information and issue a pre-approval after a verification phone call.
The slowest method is to schedule an in-person interview with a bank employee. Interviews are restricted to banking hours, and loan officers often need 3-5 days to review an application. Follow-up meetings may be required.
| Competing Lenders | Average Interest Rate Saving | 30-Year Savings at Today’s Average 6.25% Mortgage Rate |
| 1 Lender | 0.00% | $0 |
| 2 Lenders | 0.082% | $3,830 |
| 3 Lenders | 0.121% | $5,648 |
| 4 Lenders | 0.147% | $6,858 |
| 5 Lenders | 0.166% | $7,744 |
Getting pre-approved for a mortgage requires a hard credit inquiry, which might lower your credit score by around 5 points. This is a small, temporary impact.
Lenders use hard inquiries to check your full credit report, which helps them assess the risk of lending to you.
Hard inquiries differ from soft inquiries, like when you check your own credit score or when companies offer you pre-qualified credit card deals.
Soft inquiries don’t affect your score.
The good news is that this dip in your credit score from a hard credit pull is usually small and short-lived.
If you have a healthy credit history, the corresponding drop is unlikely to affect your ability to qualify for a mortgage with favorable terms.
For most buyers, the benefits of getting pre-approved—like knowing your exact budget and being ready to make an offer—outweigh the minor effect on your credit score.
If you’re comparing mortgage rates from multiple lenders, you might worry about multiple hard inquiries lowering your score further.
Fortunately, credit bureaus have built protections for consumers.
FICO scoring models use a 45-day window, where multiple mortgage inquiries are grouped together and counted as a single inquiry. This level of protection lets home buyers shop around for their best mortgage terms without worrying about harming their score.
Once you’ve been pre-approved, maintain a high credit score by not opening new credit accounts, increasing your debt, or missing monthly payments. Lenders will verify your credit before closing so keeping your finances stable ensures a smooth closing process.
A pre-approval puts you in a strong position to buy a home, and managing your credit afterward ensures you stay on track.
Getting pre-approved offers several advantages. Here are four key reasons why obtaining pre-approval before house hunting can significantly help in your home-buying journey:
A mortgage pre-approval involves a hard credit inquiry, which gives lenders a precise view of your creditworthiness. Unlike free credit tools, a pre-approval uses verified data to determine your eligibility for a home loan.
If your credit score doesn’t meet the necessary requirements, the pre-approval process will reveal the areas that need improvement, giving you time to raise your score before making an offer on a home.
Without a pre-approval, sellers and real estate agents may not take your offers seriously. A pre-approval is a formal assessment of your financial status, showing sellers that you’re ready to buy and can afford the property.
In some competitive markets, pre-approval may even be required before viewing homes.
A pre-approval outlines the maximum loan amount you’re approved for, as well as estimated interest rates, monthly payments, and closing costs. This comprehensive estimate helps you create a realistic budget for your home search.
With this information, you’ll know how much of a down payment is required and can narrow your home search to properties within your financial range.
A pre-approval may qualify you for more than you wish to borrow. However, it’s essential to determine a comfortable monthly payment and stick to a budget that aligns with your financial goals, even if you’re approved for a larger loan amount.
Use the pre-approval to guide your home search toward properties that fit within your desired spending range.
Getting pre-approved at the start of your home-buying journey is an advantage.
Pre-approvals provide a clear picture of what you can afford, helping you avoid the disappointment of falling in love with homes outside your budget.
When you know what you can afford, you can narrow your home search to properties meeting your financial situation. Plus, the earlier you get pre-approved, the more time you’ll have available to fix financial or credit-related surprises.
You’ll also have a pre-approval in hand to act quickly and be competitive in the market.
No, a pre-approval is conditional based on the information you provide. Final approval happens after your lender verifies all details and you have a home under contract.
Pre-approvals can be revoked if your financial situation changes—such as a drop in your credit score or an increase in debt. Keep your finances stable throughout the home-buying process to avoid issues.
Most lenders can provide a pre-approval within minutes to a few hours if all necessary documentation is submitted. Traditional banks may take longer—several days to process your application.
If your pre-approval expires, contact your lender to refresh it. You will need to provide updated financial documents to get a new pre-approval letter.
Pre-approvals are acceptable proof of a home buyer’s purchase credentials, whereas pre-qualifications are weak estimates based on self-reported income. Buyer’s agents will work with pre-approved buyers only, and sellers won’t accept offers from pre-qualified buyers.
The ideal time to get a mortgage pre-approved is one year before your purchase date because one-third of credit reports contain errors. Credit reporting errors harm your ability to buy a home at mortgage rates. Pre-approvals reveal those errors and give you time to fix them.
Pre-approvals also establish your price range for buying a home. With a valid pre-approval, buyers are less likely to overspend or underspend on their home.
According to credit bureau Experian, getting a mortgage pre-approval will lower a home buyer’s credit score by about five points, which is a negligible amount to many buyers.
Mortgage pre-approvals are valid for 90 days or until mortgage rates change by more than 100 basis points, whichever comes first. Pre-approvals are also invalidated when a buyer changes jobs, income, or residence; or experiences an atypical drop in credit score.
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The Complete Guide to Mortgage Pre-Approvals
This guide breaks down mortgage pre-approvals, how long they last, how they impact your credit, and the difference between pre-qualification and pre-approval.
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