How to Get Pre-Approved for a Home Loan

31 May 2025

Buying a home is an exciting journey, but before you start house hunting, there's one crucial step you shouldn't skip—getting pre-approved for a home loan. Pre-approval helps you understand how much you can afford, strengthens your offer, and speeds up the buying process.

But how do you get pre-approved? What documents do you need? How long does it take? Don't worry—we’ve got you covered! This guide will walk you through the entire pre-approval process so you can be one step closer to owning your dream home.

What is a Mortgage Pre-Approval?

A mortgage pre-approval is a lender's confirmation that you qualify for a home loan up to a certain amount based on your financial background. Think of it as a green light from the bank, showing sellers and real estate agents that you're a serious buyer.

During pre-approval, the lender will review your credit score, income, debts, and assets. If everything checks out, they'll issue a pre-approval letter, which you can use when making offers on homes.

Why is Pre-Approval Important?

You might be wondering—“Do I really need pre-approval?” The answer is YES! Here’s why:

- Know Your Budget – Pre-approval helps you understand how much you can afford, so you don’t waste time looking at homes outside your price range.
- Stronger Offers – Sellers are more likely to accept offers from buyers with pre-approval because it shows you're financially capable.
- Quicker Closing Process – Since your financials are already reviewed, the loan approval process will be faster once you find the perfect home.
- Identify Red Flags Early – If there are any issues with your credit or finances, you’ll know upfront and can address them before house hunting.

Steps to Get Pre-Approved for a Home Loan

Getting pre-approved isn’t as complicated as it sounds. Just follow these steps:

1. Check Your Credit Score

Your credit score plays a major role in determining whether you qualify for a loan and what interest rate you’ll receive. Generally, a credit score of 620 or higher is required for conventional loans, while FHA loans may allow scores as low as 580.

To check your score:

- Use free services like Credit Karma or Experian.
- Review your credit report for errors and dispute inaccuracies.
- Pay off outstanding debts to improve your score before applying.

A higher credit score can get you better loan terms, so if it's low, consider working on improving it before seeking pre-approval.

2. Gather Your Financial Documents

Lenders need a clear picture of your financial health before approving you for a loan. Be prepared to provide:

- Proof of Income – Pay stubs, W-2 forms, tax returns (last two years).
- Employment Verification – If self-employed, bank statements and tax filings.
- Assets – Savings, checking accounts, investments, and retirement funds.
- Debts – Credit card balances, student loans, car loans, and other liabilities.

Having these documents ready will make the process smoother and quicker.

3. Determine Your Debt-to-Income Ratio (DTI)

Lenders use your Debt-to-Income Ratio (DTI) to assess your ability to manage monthly payments. The formula is simple:

DTI = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100

For example, if your monthly debts total $2,000 and your income is $6,000, your DTI is 33%. Most lenders prefer a DTI below 43%, but the lower, the better.

If your DTI is too high, consider paying off debts or increasing your income before applying for pre-approval.

4. Choose the Right Lender

Not all mortgage lenders are the same. Some offer lower interest rates, while others have better first-time homebuyer programs. Compare options by:

- Checking online reviews
- Asking for recommendations from friends and family
- Comparing interest rates and loan terms
- Inquiring about lender fees and closing costs

It’s okay to shop around! You can get pre-approved from multiple lenders within a short period (usually 14-45 days) without hurting your credit score.

5. Submit Your Pre-Approval Application

Once you've picked a lender, it’s time to apply! You’ll fill out a mortgage pre-approval application, either online or in person. The lender will:

- Run a hard inquiry on your credit report.
- Verify your income and assets.
- Assess your overall financial situation.

If everything looks good, you’ll receive a pre-approval letter, usually within a few days. This letter includes the loan amount you qualify for and can be presented to sellers when making an offer.

6. Understand Pre-Approval vs. Pre-Qualification

Many people confuse pre-approval with pre-qualification. While they sound similar, they’re quite different:

- Pre-Qualification – A basic overview of your finances based on self-reported information. It’s a rough estimate of what you might qualify for but isn’t a guarantee.
- Pre-Approval – A deeper financial review with lender verification. This carries more weight and shows sellers you’re serious.

If you want to have a competitive edge in the market, always go for pre-approval instead of pre-qualification.

7. Keep Your Finances Stable

Once pre-approved, avoid making big financial changes until you close on your home. This means:

- Don’t make large purchases – Buying a new car or furniture can affect your debt-to-income ratio.
- Avoid opening new credit accounts – Doing so can lower your credit score.
- Keep paying your bills on time – Any missed payments could jeopardize your home loan.

Lenders will re-check your credit and finances before final approval, so staying financially stable is crucial.

How Long Does Pre-Approval Last?

A mortgage pre-approval is typically valid for 60 to 90 days. If you haven't found a home within that time, you may need to update your financials and get a new pre-approval letter.

What If You Get Denied for Pre-Approval?

If your pre-approval is denied, don’t panic! Here’s what you can do:

1. Ask the lender why – Understanding the reason can help you fix any issues.
2. Improve your credit – Pay off debts, make payments on time, and dispute errors.
3. Save for a larger down payment – A bigger down payment can make lenders more willing to approve your loan.
4. Reduce your DTI – Pay off high-interest debts to lower your monthly obligations.
5. Consider a different loan type – FHA, VA, or USDA loans may have more lenient requirements.

Final Thoughts

Getting pre-approved for a home loan is a crucial step that puts you in a strong position as a buyer. It gives you confidence, helps avoid surprises, and makes sellers take you seriously.

By checking your credit score, gathering the necessary documents, choosing the right lender, and keeping your finances in check, you’ll set yourself up for a smooth home-buying process.

Are you ready to start your journey to homeownership? Take the first step and get pre-approved today!