What Is Pre-Approval?
Pre-Approval: A lender's conditional commitment to lend up to an amount, based on verified income, assets and credit.
A mortgage pre-approval means a lender has reviewed your credit report and documents (pay stubs, W-2s or tax returns, and bank statements) and is willing to lend up to a certain amount, subject to conditions.
What it includes
- A hard credit check
- Review of income and assets
- Usually a run through automated underwriting
- A pre-approval letter stating the program and maximum price
What it doesn't include
A pre-approval is not final approval. The home still has to appraise, title has to clear, and your finances must stay the same. It also doesn't lock your rate.
How long it lasts
Usually 60 to 90 days, because credit reports and pay stubs expire. Lenders update it when you go under contract.
Good to know
A strong pre-approval is one of the best ways to compete without waiving protections, because sellers want confidence your loan will close.