🏦 What Is Mortgage Pre-Approval in Real Estate?
A mortgage pre-approval is a lender’s written estimate of how much you can borrow to buy a home — based on your credit, income, debt, and down payment. It gives buyers confidence, speeds up offers, and shows sellers that you’re financially qualified.
đź’ˇ How Mortgage Pre-Approval Works
To get pre-approved, you submit financial documentation — such as pay stubs, tax returns, and bank statements — to a lender. The lender verifies your information and issues a pre-approval letter stating the maximum loan amount you qualify for and the loan type.
This step typically happens before home shopping and is more reliable than pre-qualification, which is only an estimate based on self-reported information.
âś… Why Mortgage Pre-Approval Matters
- Strengthens offers: Sellers take your offer more seriously when you’re pre-approved.
- Sets a realistic budget: Know what you can afford before viewing homes.
- Speeds up closing: Much of the underwriting work is already done.
- Helps you compare loans: Pre-approval letters often show multiple loan types and rates.
đź“Š Common Loan Types After Pre-Approval
After receiving pre-approval, buyers typically choose between different loan structures:
- Fixed-Rate Mortgage — predictable monthly payments with a stable interest rate.
- Adjustable-Rate Mortgage (ARM) — initial lower rate that can change over time.
- Reverse Mortgage — available to senior homeowners converting equity into cash.
đź“ť Steps to Get Pre-Approved
- Check your credit report and score.
- Gather proof of income, assets, and employment.
- Choose a lender and complete a pre-approval application.
- Receive your pre-approval letter to use in offers.
âť“ Frequently Asked Questions
How long does a mortgage pre-approval last?
Most pre-approvals are valid for about 60 to 90 days, depending on the lender. After that, you may need to re-verify your financial information.
Does pre-approval affect my credit score?
Yes, slightly. The lender performs a hard credit inquiry, which can temporarily reduce your score by a few points. However, multiple inquiries within a short window count as one.
Can I be denied after pre-approval?
Yes. Major changes to your credit, income, or debt before closing can cause a denial. Always avoid new loans or credit cards after pre-approval.