How to Get a Mortgage Pre-Approval

Ready to start shopping for a home? One of your first steps is to apply for a mortgage pre-approval. Many sellers require a pre-approval letter before they will let you view their homes. 

The good news is that the process is relatively easy. Learn how to get mortgage pre-approvals so you can start your homebuying journey. 

How to get a mortgage pre-approval

Here’s a basic rundown of what it takes to get pre-approved for a mortgage:

• Choose a potential lender, whether a bank, credit union, or mortgage specialist
• Complete a pre-approval application
• Submit personal identification and financial documents 
• Authorize a credit check

The lender will evaluate your income, debt, assets, and credit history. If the lender believes you are qualified to take out a mortgage, you’ll receive a pre-approval letter. This letter will state the amount you may be eligible to borrow. 

Getting a mortgage pre-approval early in the homebuying process will help you:

• Understand your price range
• Strengthen your offer
• Avoid surprises during the underwriting process
• Lock in competitive rates when the time comes

You must provide accurate information so that the lender can make an informed decision. 

Pre-approval vs. pre-qualification 

Many people confuse these “pre-approval” and “pre-qualification,” but they mean very different things. You can get pre-qualified for a financial product, including a mortgage, just by self-reporting your information. The lender won’t run a hard credit check or look at your financial records. 

To get pre-approved, you’ll have to go through a more detailed process. Most lenders run a hard credit inquiry, and they will request proof of income, such as pay stubs. 

What you need to get pre-approved

When you’re learning about how to get mortgage pre-approvals, one of the most important things is making sure your documents are ready. Here’s what you’ll need. 

Proof of income (pay stubs, W-2s, tax returns)

For most borrowers, providing proof of income is the most tedious part of the pre-approval process. Your lender might ask for:

• Pay stubs for the previous month
• W-2s for the previous two years
• Tax returns for the previous two years

Some lenders may require additional pay stubs and financial documents, especially if your income is less stable.

Bank statements and assets

Bank statements are always required when applying for a mortgage, as is a list of your assets. Lenders use this information to assess your ability to close the loan and pay the mortgage. 

Some lenders require you to provide these documents before issuing a pre-approval. Others may not ask for them until it’s time to finalize your mortgage. 

Employment verification

The lender will reach out to your employer to verify that you work there. They will confirm how many hours you work per week or pay period, as well as your pay rate. You will need to sign an authorization form before a lender is allowed to contact your employer. 

Credit check authorization

Lenders are required to obtain a credit check authorization before running a hard inquiry. You should be able to sign this form electronically. Review it carefully to make sure all of your information is correct, including your Social Security number and date of birth. 

Credit score requirements for mortgage pre-approval

Here’s a closer look at the role your credit score plays in the pre-approval process: 

Minimum score by loan type

The minimum credit score will vary based on the mortgage type. Typical score requirements are as follows:

• Conventional Loan: 620 or higher
• FHA: At least 580 to qualify for 3.5% down payment, or as low as 500 with a higher down payment 
• VA loans: No official minimum, but many lenders prefer 620 or higher
• USDA loans: Typically 640 or higher

Although you might be able to get a loan as long as you meet the minimum threshold, you’ll need a higher score to qualify for the best rates. 

How your credit affects your interest rate

Mortgage interest rates vary based on overall economic factors, as well as your financial history. If you have exceptional credit, you’ll qualify for a better rate than you would with average credit. 

How to improve your score before applying

If your score needs work before you apply for a mortgage or start shopping for a home, focus on:

• Paying down credit card balances and other debts
• Making payments on time
• Avoiding new credit applications
• Checking your report for errors

Building your score is a long game. There are no shortcuts. Be patient and exhibit consistent positive behavior over time. 

How long mortgage pre-approval takes

The mortgage pre-approval process is relatively quick, but there can be stumbling blocks along the way. Here’s what you can expect. 

Typical timeline

If you have all of your documents in order, you could get pre-approved on the same day you apply. Otherwise, it may take a few days. The timeline largely depends on how long it takes you to gather the required documents. 

What can delay approval

Most delays are linked to missing documents. A lender won’t issue a pre-approval until it receives every document that it has requested. Other delays could be due to holidays or weekends. For example, if you apply online on a Sunday, you won’t hear back until the business reopens. 

How to improve your chances of getting pre-approved

Getting denied for a mortgage pre-approval can be frustrating, especially if you are ready to find your dream home. The good news is you can take a few steps to increase your odds of approval.

Lower your debt-to-income ratio

Lenders review your debt-to-income (DTI) ratio to calculate how much you can afford in monthly mortgage payments. Different loan types have different DTI ratio limits. If you are above the threshold, you won’t be approved. Lowering your DTI by paying off debt can help you qualify for a more expensive home. 

Increase your savings

Building up your savings will position you as a responsible borrower who manages their money well. It will also serve as evidence that you can afford a down payment and closing costs. 

When you’re saving, make sure to account for all of the out-of-pocket expenses that come with buying a home, such as inspections, loan origination fees, and appraisal fees. These costs are separate from your down payment. 

Build your credit before applying

The best move you can make is to build your credit score. This means paying bills on time and taking advantage of the positive activity you are already exhibiting. You can do this by reporting rent payments with a service like Kikoff. 

Conclusion

Figuring out how to get mortgage pre-approvals is the easy part. Building a strong credit history is the longer part of the homebuying journey, as it requires consistency over months or years. 

Fortunately, Kikoff can help. Our platform makes it easy to report on-time rent payments that you are already making. Increasing your positive payment history can strengthen your score and make you a more appealing applicant to lenders. 

Build credit with Kikoff: no hard credit check needed to sign up.