Pre-approval vs pre-qualification

A pre-approval (some lenders call it a prequalification) is a lender's letter saying how much it's generally willing to lend you, based on certain assumptions. It isn't a guaranteed loan offer, but it shows sellers you can likely get financing. Lenders may check your credit for one. Known¹

Sellers often want one before accepting an offer; it's a tentative yes, not a guaranteed loan. Known²

Lenders price the same borrower differently, and comparing them is how you find out.

• Is this a preapproval with my credit and income checked, or a prequalification?
• Which documents do you need from me?
• What rate, points, taxes and insurance did you assume?
• When does the letter expire?
• Is anything in my file likely to raise my rate or get the loan denied later?
• What fees, if any, do I pay before I decide to go ahead? Known²

Lenders verify your income, savings and identity, and having everything ready can save days.

• Pay stubs for the last 30 days
• W-2 forms for the last two years
• Signed federal tax returns for the last two years
• Proof of any other income
• Your two most recent bank statements
• Statements showing two months of history for your down payment money
• A signed gift letter if family is giving you money Rule³

Documents go stale: Fannie Mae requires credit, income and asset documents to be no more than four months old when you sign the loan. Rule⁴

Preapproval letter: usually 0–5 business days after you send the lender your documents. Est.Estimate^2,5

Letters often expire in 30 to 60 days, so refresh yours if your search runs longer. Known²

Credit checks by mortgage lenders within 45 days count as a single inquiry. Known⁶