How to get preapproved for a mortgage: 4 simple steps

Ready to buy a home? Great! But first, you’ll need to get preapproved by a lender, and we are here to show you how. Follow these simple steps, and you'll be on your way to getting preapproved for a mortgage in no time at all!


The quick and easy guide to getting preapproved for a mortgage

Lending concept. Pre-approved mortgage loan.
Learn how to get preapproved for a mortgage. Source: Adobe Stock

Mortgages can be confusing, especially if you don’t know where to start. Luckily, in this post, we’ll give you simple tips on how to get preapproved for a mortgage!

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By following these tips, you’ll be well on your way to securing the home of your dreams. So what are you waiting for? Read on to get started.

What is a mortgage preapproval?

We all know that buying a home is a huge decision! And mortgage preapprovals are one of the key steps in the home-buying process.

But how to get preapproved for a mortgage? Well, we’ll explain everything you need.

A mortgage preapproval is a document from the lender that states how much and what type of home loan you’re expected to qualify for.

As a result, this statement will help you understand how much you can afford and will also show agents and sellers that you can get the necessary financing to buy a home.

Usually, the mortgage preapproval e base on your financial situation. Therefore, the lender will consider your income, savings, investment accounts, and debts.

Additionally, the lender performs a hard credit inquiry to check your creditworthiness. After analyzing these factors, the lender will estimate how much of a home you can afford.

As a result, after the preapproval, you’ll access the maximum amount you’re allowed to borrow, your estimated mortgage rate, and your estimated monthly payment.

If you’re like most people, you might have wondered: Is getting preapproved the same as getting prequalified?

Long story short, no! They’re not the same thing! Despite the similar terms, they differ decisively.

For instance, prequalifying for a mortgage will give you a slight idea of the type of mortgage you might qualify for. It requires a soft credit check and won’t need further verification.

On the other hand, a preapproval will require more underwriting and indicates your ability to get a mortgage. As a result, it is a more useful resource when making an offer for a home.

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What credit score do you need to get preapproved for a mortgage?

Credit scores are one of the most important numbers in our financial lives. It indicates how likely you are to pay your debt. And when it comes to mortgages, it is no different.

As a result, this three-digit number will be a major factor in your preapproval process. The higher your score, the higher your chances of qualifying for better mortgage conditions are.

If you have a credit score between 740 to 799, it is considered good. Having 800 or more means that you have an excellent score.

These numbers will not only influence whether you’re preapproved but will also help you qualify for lower rates and better terms.

Nevertheless, remember that different types of mortgages have different credit score requirements. Thus, for most lenders, you’ll need at least 620 to prequalify for a conventional loan.

Jumbo often requires a minimum score of 700. Also, government-backed loans, such as FHA, VA, and USDA, will let you prequalify with a credit score of as low as 580.

As noted, getting preapproved by a lender will require a hard credit inquiry. Consequently, this will lower your score. But don’t worry, it will increase back after a while.

Four tips for getting preapproved for a mortgage

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Things you need to do to get preapproved. Source: FreePik

Now that you know what a mortgage preapproval is and how it works, it’s time to work. Below, let’s take a look at four tips on how to get preapproved for a mortgage!

Following these tips, you’ll be one step closer to buying your dream home! Let’s go!

Check your credit score

As said, your credit score greatly impacts whether you’re preapproved for a mortgage. The lender will check your score when making their decision.

So before starting your preapproval process, take a closer look at it. You can do it online and for free. Remember that a higher credit score will grant you better mortgage conditions.

So if yours it’s not that good, you’ll have some time to work on it. When checking your credit history, remember to look for any errors or missed reports to dispute it.

This way, you can start your homebuying journey as a responsible borrower.

Calculate your debt-to-income ratio

Simply put, your debt-to-income ratio is a percentage that compares how much you owe to how much you earn monthly. The DTI is also a decisive factor in the lender’s decision.

As a result, most of them are more likely to preapprove borrowers with a debt-to-income ratio of 36% or lower.

Therefore, before starting your preapproval application, remember to calculate it, and if your DTI is potentially high, try to lower it.

You can do it by refinancing, getting on an income-based repayment plan, or simply paying down your debt.

Collect your documentation

To get preapproved for a mortgage, you’ll need to provide documentation to the potential lender. So make sure you’ve gathered all the required papers before starting your process.

Mostly, you’ll need to provide proof of income, employment verification, proof of assets, and identification, including:

  • 30 days of pay stubs;
  • W-2 tax return from the past two years;
  • 60 days of bank statements;
  • You’ll need to provide a schedule K-1 (form 1065) if you’re self-employed.

Shop around

One key to getting a good mortgage deal is contacting more than one lender. This will help your compare the offers, rates, and fees and save some money.

So check more than one lender to find the one that best fits your needs.

What happens after you’re preapproved?

Start your homeownership journey. Source: FreePik

If you’re preapproved, congratulations! You can start your home-buying journey.

First, you’ll obtain your preapproval letter, which will help you show sellers that you’re financially equipped to buy a home.

With this tool, you can start your house-hunting without worries. However, preapproval letters are valid for a specific period, usually 60 or 90 days. So don’t take too long to choose a home.

After deciding on the property you want to buy, you can officially apply for a mortgage, which can take some weeks. But you can easily monitor your application status in most cases.

See? Getting preapproved for a mortgage is not that difficult. And by following these steps, you can easily get preapproved by a lender and start your homeownership journey.

Lastly, we have another excellent article to help you with your mortgage process. Read the following article and find the best mortgage lender of this year! Let’s get started.

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About the author  /  Beatriz Vieira

Beatriz Vieira is a producer and copywriter who is part of the finance writer team in this portal. She has a degree in Journalism and aims to improve her bilingual writing skills. Her subjects of most significant interest are culture, finances, and self-development.

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