Mortgage Preapproval: What It Is and How to Get One

If you are serious about buying a home, getting preapproved is one of the smartest first moves you can make. It tells you how much you may be able to borrow, helps you shop in the right price range and shows sellers that you are ready to close. Here is what the process looks like and how to get through it smoothly.

Prequalification Versus Preapproval

These two terms sound alike, but they carry different weight.

• Prequalification is a quick estimate based on information you provide, often without a credit check or document review. It is useful if you are just starting to explore and want a ballpark figure.
• Preapproval goes further. The lender reviews your credit report and verifies your income, assets and debts with real documents. The result is a more reliable estimate of what you can borrow and a letter you can submit with offers.

If you plan to make offers soon, preapproval is the one you want. In competitive situations, a seller may choose a preapproved buyer over one who is only prequalified.

Step 1: Choose a Lender You Trust

You can get a mortgage from banks, credit unions and independent mortgage lenders. Ask friends, family and coworkers who they used and whether they would recommend them. Read reviews and pay attention to how a loan officer treats you during the first conversation. You want someone who explains options clearly, answers questions promptly and is easy to reach.

Step 2: Gather Your Documents

Having paperwork ready speeds things up. Most lenders will ask for:

• Government-issued photo ID
• Recent pay stubs, typically covering the last month
• W-2s and, in many cases, federal tax returns for the past two years
• Recent bank and investment account statements
• Details on monthly debts such as car loans, student loans and credit cards
• For self-employed borrowers, business tax returns and possibly a profit and loss statement
• Gift letter, if family is helping with your down payment

Step 3: Complete the Application and Credit Check

You will fill out a loan application and authorize the lender to pull your credit. Your loan officer reviews your credit history, calculates your debt-to-income ratio and looks at your savings. From there, they can discuss which programs may fit, such as a conventional loan, an FHA loan or a VA loan, and how different down payment amounts would affect your payment.

If you are worried about a credit check, know that multiple mortgage inquiries within a short shopping window are generally treated as a single inquiry for scoring purposes.

Step 4: Receive Your Preapproval Letter

Once the lender is satisfied, you will receive a letter stating the loan amount and program you are preapproved for. Your agent will include it with your offers. Preapproval letters have an expiration date, often a few months, so if your search runs long, your lender may need updated documents.

What Happens After Your Offer Is Accepted

Preapproval is a strong step, but it is not final loan approval. Once you are under contract, your file goes to underwriting for a deeper review. The lender will:

1. Order an appraisal to confirm the home’s value.
2. Confirm the property meets the program’s standards for safety and condition.
3. Re-verify your income, employment and assets.
4. Review the title and any other conditions before issuing a clear to close.

Protecting Your Preapproval

Between preapproval and closing, keep your finances as steady as possible. Avoid opening new credit, financing large purchases, changing jobs or moving large sums of money without talking to your loan officer first. Changes like these can affect your approval.

If you are buying for the first time, our first-time home buyer page covers more of the journey, and our mortgage calculator can help you plan your budget.

Ready to get preapproved? Reach out to FLO Mortgage and a loan officer will walk you through each step.

This article is for general education and is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and program availability. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.