Mortgage Preapproval Explained
A preapproval turns you from a browser into a buyer. Here is what lenders check, what you need to hand over, and why the difference between prequalified and preapproved matters when you write an offer.
Fact-checked and reviewed for financial accuracy by Priya Kannan, CFP®. Read our content review process.
A preapproval is a lender's conditional commitment to lend you a specific amount, based on documents they have actually verified. It is the difference between telling a seller you think you can buy their house and showing them a letter that says a lender has already checked.
Prequalified versus preapproved
These words get used interchangeably and they should not be. A prequalification is an estimate based on what you tell the lender. It takes ten minutes, involves no verification, and carries almost no weight with a seller. A preapproval involves a credit pull and document review, and produces a letter with a specific dollar figure.
Some lenders go further and offer an underwritten or "fully approved" preapproval, where a human underwriter reviews the file before you have a property. In competitive markets this is worth requesting: it shortens your financing contingency and makes your offer look nearly as strong as cash.
What you will need to provide
- Two most recent pay stubs, or year-to-date profit and loss if self-employed
- W-2s or 1099s for the past two years
- Federal tax returns for the past two years, all schedules
- Two months of statements for every account holding your down payment
- Photo identification and Social Security number for the credit pull
- Documentation for any large recent deposit — lenders will ask about anything unusual
- Divorce decree, child support order, or bankruptcy discharge papers if applicable
What the lender is checking
Four things, in roughly this order of importance: your credit history and score, your debt-to-income ratio, your employment stability, and your assets. A middle credit score above 740 puts you in the best pricing tier on a conventional loan; below 620 you are generally limited to government-backed programs.
Employment matters more than people expect. Two years in the same line of work is the standard. Changing jobs within your field is usually fine; changing from salary to self-employment right before applying will complicate the file substantially.
Shop more than one lender
Rate and fee differences between lenders on the same borrower profile are routinely worth thousands of dollars. Request a Loan Estimate — the standardized three-page form — from at least three lenders and compare page two, where the fees are itemized.
Credit scoring models treat multiple mortgage inquiries within a short window as a single event, so shopping does not meaningfully damage your score. The window is typically 14 to 45 days depending on the model.
| Line | Where to find it | Why it matters |
|---|---|---|
| Interest rate and APR | Page 1 | APR folds fees into the rate for comparison |
| Origination charges | Page 2, Section A | Highly variable between lenders |
| Discount points | Page 2, Section A | Prepaid interest — worth it only if you keep the loan long enough |
| Services you can shop for | Page 2, Section C | Title and settlement fees are negotiable |
| Cash to close | Page 2 bottom | The number that actually leaves your account |
How long a preapproval lasts
Most letters are valid 60 to 90 days, because credit reports and income documents go stale. Renewing is usually a matter of updating pay stubs and re-pulling credit. If your search runs long, keep the letter current — an expired preapproval attached to an offer looks careless.
What can undo a preapproval
Frequently asked questions
Does a preapproval hurt my credit score?
A hard inquiry typically costs a few points and recovers within months. Multiple mortgage inquiries inside the shopping window count as one for scoring purposes.
How many lenders should I get preapproved with?
Three is a reasonable target. You only need one letter for offers, but comparing three Loan Estimates gives you real negotiating leverage on fees.
Can I be denied after preapproval?
Yes. Preapproval is conditional. Changes to your credit, income, employment, or the property itself — including a low appraisal or title problems — can all derail final approval.
Is a preapproval letter required to tour homes?
Not always, but many listing agents require one before scheduling private showings, and most sellers will not consider an offer without one attached.
Editorial note. This article is educational and is not financial, tax, or legal advice. Loan terms, rates, insurance costs, and tax rules vary by lender, state, and individual circumstance. Figures shown are illustrative. Confirm details with a licensed lender, tax professional, or attorney before making a decision.
