If you’re planning to buy a home, one of the smartest first steps is getting pre-approved for a mortgage. Not only does it give you a clear idea of your budget, but it also shows sellers you’re a serious buyer. In today’s competitive housing market, pre-approval can even make the difference between winning or losing your dream home.
Here’s a step-by-step guide to help you through the pre-approval process.
✅ Step 1: Check Your Credit Score
Your credit score plays a major role in determining your mortgage eligibility and interest rate.
- Why it matters: Lenders want to see that you manage debt responsibly.
- Minimums: Conventional loans typically require at least 620, while FHA loans may accept scores as low as 580.
📌 Tip: Get a free copy of your credit report and fix any errors before applying.
✅ Step 2: Gather Your Financial Documents
Lenders will need proof of your financial health. Be ready to provide:
- Pay stubs (last 30 days)
- W-2s or 1099s (last 2 years)
- Tax returns (last 2 years)
- Bank statements (last 2–3 months)
- Proof of assets (retirement accounts, savings)
- Photo ID
📌 Tip: Keep digital copies in a folder to speed up the process.
✅ Step 3: Calculate Your Budget
Before talking to lenders, know how much house you can realistically afford.
- Use the 28/36 rule: Spend no more than 28% of your monthly income on housing and no more than 36% on total debt.
- Factor in hidden costs like property taxes, insurance, and HOA fees.
📌 Tip: Online mortgage calculators can give you a ballpark estimate.
✅ Step 4: Shop Around for Lenders
Not all lenders are the same. Compare offers from:
- Banks
- Credit unions
- Mortgage brokers
- Online lenders
📌 Tip: Getting multiple pre-approvals within a short window (about 30 days) won’t hurt your credit score significantly, since they count as one inquiry.
✅ Step 5: Submit Your Application
Once you’ve chosen lenders, you’ll complete a pre-approval application. This usually involves:
- A credit check (hard inquiry)
- Reviewing your financial documents
- Income and employment verification
📌 Tip: Be honest—lenders will verify everything.
✅ Step 6: Receive Your Pre-Approval Letter
If approved, you’ll receive a letter stating:
- The maximum loan amount you qualify for
- The estimated interest rate
- Loan type (conventional, FHA, etc.)
This letter typically lasts 60–90 days and can be renewed if you don’t find a home within that time.
📌 Tip: Sellers take offers with pre-approval letters much more seriously.
✅ Step 7: Maintain Your Financial Stability
After pre-approval, avoid making big financial changes that could affect your eligibility.
- Don’t open new credit cards or loans.
- Don’t change jobs (if possible).
- Keep paying bills on time.
📌 Tip: Think of pre-approval as “financial freeze mode” until closing.
🏡 Final Thoughts
Getting pre-approved for a mortgage is an essential step in the homebuying journey. It helps you understand your budget, strengthens your offers, and streamlines the buying process.
👉 By checking your credit, gathering documents, shopping around, and staying financially consistent, you’ll be one step closer to holding the keys to your new home.