A written commitment from a lender stating how much they are willing to lend you, based on a review of your credit, income, assets, and debts. Pre-approval involves a hard credit check and is stronger than pre-qualification. Most sellers and real estate agents expect you to have a pre-approval letter before making an offer on a home. Pre-approval letters are typically valid for 60 to 90 days.
Why It Matters
Mortgage pre-approval is a lender's conditional commitment to lend you a specific amount based on a review of your financial documents. Unlike pre-qualification (which is just an estimate based on self-reported info), pre-approval involves a credit pull, income verification (W-2s, pay stubs, tax returns), and asset documentation. The result is a pre-approval letter stating the loan amount you qualify for.
Pre-approval is essentially required in competitive markets — sellers won't take your offer seriously without one. It tells the seller you can actually afford their home and that a lender has verified your finances. Pre-approvals are typically valid for 60-90 days and don't lock your rate. Get pre-approved before you start house hunting, not after you find a home you love.
Real-World Example
Documents needed: 2 years of W-2s, 30 days of pay stubs, 2 months of bank statements, photo ID, 2 years of tax returns (if self-employed). Timeline: online application takes 20-30 minutes, lender review takes 1-3 business days. Result: pre-approval letter stating you qualify for up to $X.
Pro Tip
Get pre-approved by 3 lenders within a 14-day window (counts as one credit inquiry). Compare their rates and fees, then use the best offer when you're ready to make an offer on a home.