Most sellers expect to see a pre-approval letter with your offer. Here’s what it is and why it matters.
Pre-Approval vs. Pre-Qualification (Not the Same)
Pre-qualification (weaker)
- You tell the lender about your finances (not verified)
- Can take minutes
- Says “you might qualify for up to $350K”
- Sellers give it less weight
- Can change once the lender verifies everything
Pre-approval (stronger)
- The lender reviews your credit and documents (pay stubs, tax returns, bank statements)
- Often takes a few days
- Says “based on what we’ve reviewed, you’re conditionally approved for up to $350K”
- Sellers take it seriously
- Still conditional: the property, the appraisal, and any change in your finances can affect final approval
Get pre-approved. A pre-qualification usually isn’t enough to compete.
The Pre-Approval Process
Step 1: Application
- The lender asks about your income, debts, and assets
- Online or in person
Step 2: Documentation (lenders vary, but typically)
- Recent bank statements (often 2 months)
- Recent tax returns and W-2s (often 2 years)
- Recent pay stubs
- A list of debts (cards, car loans, student loans)
Step 3: Verification
- The lender pulls your credit report
- Verifies employment and income
- Verifies assets
Step 4: Review
- The lender calculates your debt-to-income ratio
- Determines the maximum loan amount
- Issues a pre-approval letter
Timeline: Often a few business days, depending on how quickly you provide documents
Cost: Many lenders don’t charge for a pre-approval. Ask yours.
What Lenders Look At
Credit score
- No single required score; many lenders still use 620 as their floor on conventional loans even though Fannie Mae dropped its fixed minimum in late 2025
- FHA can go down to 580 with 3.5% down
- Higher scores generally get better rates and pricing
Debt-to-income ratio (DTI)
- All monthly debts, including the estimated new mortgage payment, divided by gross monthly income
- Many lenders look for around 43% or lower; some programs allow higher
- Example: on a $60,000 salary, gross monthly income is $5,000. If your existing debts plus the estimated new mortgage payment total $2,000 a month, your DTI is $2,000 / $5,000 = 40%.
Employment and income stability
- Typically about 2 years of steady income history
- Gaps and job changes explained (moving up in the same field is usually fine)
Assets
- Down payment and closing costs saved and verified
- Reserves, if your loan program requires them
- Investment and retirement accounts can count toward reserves
What Pre-Approval Tells You
Your maximum loan amount. For example, say a lender pre-approves you for a $310,500 loan, assuming a 6.5% rate:
- With 10% down, that supports a $345,000 purchase
- With 20% down, about $388,000
- With 5% down, about $327,000
(Rates change daily. For a current reference point, Freddie Mac’s 30-year average was 6.76% on September 10, 2026, as cited in my September 2026 market report. Your rate depends on your own loan.)
Your rate isn’t locked yet. A pre-approval usually isn’t a rate lock. You typically lock your rate once you’re under contract, and lock periods are often 30 to 60 days.
Conditions: The approval depends on an acceptable appraisal, final underwriting, and no major change in your finances.
Pre-Approval vs. Final Approval
Pre-approval: “Based on what we’ve reviewed, we expect to lend you up to $350K, subject to conditions.”
Final approval (clear to close): “The appraisal and underwriting are complete, and you’re cleared to close.”
Avoid opening new credit, changing jobs, or making large unexplained deposits between the two.
How Long Is a Pre-Approval Good For?
Pre-approval letters expire, and the window varies by lender, so check the date on yours. If rates have moved or your finances have changed, ask for an updated letter.
After your offer is accepted, the lender orders the appraisal and completes full underwriting.
Key Takeaways
- Most sellers expect a pre-approval with your offer; a pre-qualification is weaker
- The lender verifies your credit, income, and assets
- It often takes a few days and usually costs nothing
- A pre-approval is not a rate lock, and it’s still conditional
- Keep your finances steady until closing
Ready to get pre-approved? I can connect you with local lenders. Call me at (540) 246-9067.
Frequently Asked Questions
What is the difference between pre-qualification and pre-approval?
Pre-qualification is based on finances you report yourself and can take minutes. Pre-approval means the lender has reviewed your credit and documents, so sellers give it more weight. Both are still conditional.
What documents do I need to get pre-approved?
Lenders vary, but typically recent bank statements (often 2 months), tax returns and W-2s (often 2 years), recent pay stubs, and a list of your debts.
How long does pre-approval take, and does it cost anything?
It often takes a few business days, depending on how quickly you provide documents. Many lenders don't charge for it, so ask yours.
What credit score do I need?
There is no single required score. Fannie Mae dropped its fixed minimum for automated underwriting in late 2025, though many lenders still use 620 as their own floor on conventional loans. FHA can go down to 580 with 3.5% down. Higher scores generally get better rates and pricing.
Does pre-approval lock my interest rate?
No. A pre-approval usually isn't a rate lock. You typically lock your rate once you're under contract, and lock periods are often 30 to 60 days.
How long is a pre-approval letter good for?
Letters expire and the window varies by lender, so check the date on yours. If rates have moved or your finances have changed, ask for an updated letter.