Before you begin the home buying process, it can be quite beneficial to consider getting pre-approved for a loan. Not only does it verify that you as a buyer have the financial means to complete a home purchase, but you’ll also know how much you’ll be able to borrow when it’s time to get a loan. 

It also proves your credibility as a buyer to any home sellers you work with. So contrary to what many think, loan pre approval is not just to the agent’s benefit.

Ready to learn more about loan pre approvals? Find out everything you want to know below:  

What is Loan Pre Approval?

First, let’s define what a loan pre approval is. A loan pre approval is a statement from a lender who looks at your finances and determines the amount of money they will allow you to borrow for a home loan. They base this on your financial situation, such as your income, debt, assets, and credit history. 

How Do I Get Pre Approved for a Loan? 

To get preapproved for a loan, you will need to provide several important documents to your lender, as well as a credit check. 

Some of the documents you can prepare are:

  • Recent pay stubs
  • Federal income tax returns, including W-2’s (from the last 2 years) 
  • Recent bank statements 
  • Any investment account statements 
  • Identity documentation (driver’s license, passport, etc.) 

A credit check is generally requested by a lender as well, so be prepared that will impact your credit score. Read more about the importance of credit scores first, and then consider obtaining a free copy from each of the major credit bureaus. That can be done once every year. You can get the report at

Keep in mind, you generally need a credit score of at least 620 to qualify for a mortgage. If your score is lower than that, there are programs you can consider, like FHA loans.   

Loan Pre Approval or Loan Prequalification? 

It’s important to understand the difference between pre approval and prequalification. 

Pre-qualifications often include just a soft credit inquiry, whereas pre approvals include a full credit check as noted above. Lenders will rely on your representation of your financial situation, whereas with pre approvals, they will require documentation. 

Pre-qualifications are not taken as seriously by real estate agents or sellers, making a pre approval much more advantageous in the home buying process. 

Although pre approvals are more intense, they are supported by data and accepted as proof of your ability to afford the home you are interested in. 

Time Estimate to Receive a Loan Pre Approval

Generally, it will take a few days to receive a mortgage pre approval. However, there is a range depending on several factors. For example, it can take several weeks to receive a pre approval letter if you have to wait for an income audit. But it is possible to receive a pre approval within one business day if you are well organized and your credit is strong.

The Value of Loan Pre Approval

There are so many benefits of getting pre-approved for a loan before beginning the home buying process. Some of the greatest benefits are outlined below:  

1. Pre approval confirms to sellers that you’re serious about buying a home. 

Sellers want to know that a potential buyer can follow through with the home purchase. With a pre approval, you’re much less likely to be passed over in favor of someone who has a lender and the funds prepared because you will already qualify to buy it. 

So not only does it put you in a great position with home sellers, but it also allows you to make an offer on homes that you are interested in. This gives many home buyers peace of mind throughout the process. 

2. Pre approval helps you look at homes that’ll be the best fit. 

Save time in the home search process by knowing what you really want in a home, as well as what you can afford. That’s what a pre approval helps you do. Our team sends any potential buyers monthly market reports, an email with the listings of available homes that interest them. With a pre approval you can change the parameters to closely capture the types of homes you are qualified to buy. 

Learn how to sign up for monthly market reports on our site today if you are currently in the market. It is powerful information that you need to know while searching for homes! 

3. Pre approval gives you an idea of how much you can afford. 

As mentioned above, a major benefit of loan pre approvals is that you will see how much money a lender is willing to lend you. This makes the task of calculating your down payment and adjusting expectations for your budget and the type of home you can afford so much clearer. 

This naturally decreases the number of homes on the market that will be applicable to you, saving you time in the research phase and saves you from falling in love with a home you can’t afford. 

4. Pre approval gives you time to compare and find the best lender. 

Getting started with the pre approval process at the beginning of your home search gives you time to explore the lenders available to you. Even if you are pre-approved with a specific lender, you are not committed to working with that particular lender. However, it will speed up the closing of the loan because they will have your paperwork ready to go on file. 

5. Pre approval is a great negotiation tool.

Loan pre approval is a helpful negotiation tool for potential buyers as well. You will close on a home loan quicker, making it appealing to sellers, who often choose an offer with a pre approval over offers that do not.

6. Pre approval speeds up the closing period. 

Mortgage approval is often the longest contingency to satisfy in a purchase contract. Additionally, there is no window while your loan application is being processed, so obtaining a pre approval as soon as you begin your search can speed things up entirely. 

You can even shorten a 30-day closing period to 2-3 weeks, under certain circumstances. This can come in handy and move your offer to the top if you can accommodate a seller’s need to close quickly.  

Important Note

Mortgage pre approvals will often expire 60 days following when they were written. Factors like your income, employment status, credit score, and interest rates can change, which is one of the main reasons for the expiration period. But not to worry, your lender will update the necessary paperwork so you can continue searching for homes with pre approval. 


The Pursuing Homes Real Estate Group would be happy to connect you with a great lender to get this conversation started. Feel free to contact us to discuss pre approval with one of our expert realtors.