Mortgage Pre-Approval: Documents, Steps and What It Means

A mortgage pre-approval is a lender’s letter saying it is generally willing to lend you up to a set amount, based on a check of your credit and, usually, your income and asset documents. It is not a guaranteed loan. The CFPB says plainly that neither a prequalification nor a pre-approval is a guaranteed loan offer. Still, it is the letter NYC sellers, listing agents and co-op boards expect to see before they take your offer seriously.

Here is how pre-approval differs from prequalification and a commitment letter, what happens to your credit score, and the documents to gather. The checklist below saves your progress in this browser.

Prequalification vs pre-approval vs commitment

Lenders don’t use these words the same way. The CFPB notes that some lenders issue a prequalification based on information you report yourself and a pre-approval based on information they have verified. Others go further and issue a written commitment, valid for a set period and subject to limited conditions. Ask each lender what its letter is based on, not just what it is called.

The commitment is the letter that matters in your contract. See the mortgage contingency guide for how commitment deadlines work.

Why NYC sellers and boards expect a pre-approval

• Listing agents screen offers. Many NYC listing agents ask for a pre-approval letter and proof of funds along with an offer, so the seller can compare buyers on certainty, not just price.
• Co-op boards set their own limits. A pre-approval for a large loan doesn’t mean a co-op will let you borrow that much. Many co-ops set a minimum down payment and look at your debt-to-income ratio and the cash left after closing. Check your numbers with the co-op board approval calculator and read co-op financial requirements.
• Timelines are tight. NYC contracts often give you only weeks to get a commitment. Having your documents already verified saves time. See the contract-to-closing timeline.

How pre-approval affects your credit score

A lender usually pulls your credit for a pre-approval. The CFPB says multiple credit checks from mortgage lenders within a 45-day window are recorded on your credit report as a single inquiry, so comparing several lenders has the same impact as talking to one. A single inquiry typically has a small effect on your score, and the CFPB says checking your own credit does not affect it.

If a lender checks your credit and tells you that you don’t qualify, the CFPB says it must send you an adverse action notice, even if you never filed a formal application. That notice explains why, which helps you fix the problem. See how to improve your credit score before a mortgage.

How to get pre-approved, step by step

1. 1

   Check your own credit first

   Pull your credit reports and fix any errors before a lender sees them. The CFPB suggests getting pre-approved early partly so you have time to correct credit report problems. See what credit score you need.
2. 2

   Know your numbers

   Work out a price range and your debt-to-income ratio before you talk to lenders, using the home affordability calculator and the DTI calculator.
3. 3

   Gather documents

   Use the checklist below. Having everything ready makes the pre-approval more thorough and faster.
4. 4

   Apply with two or three lenders

   Include a bank, a credit union or a mortgage broker. For co-ops, ask whether the lender makes co-op share loans and knows your building.
5. 5

   Read the letter’s limits

   Note the amount, the loan type, any expiry date and the conditions. Ask whether the lender can issue a letter for a specific offer price, so you don’t reveal your full budget to a seller.
6. 6

   Keep your finances steady

   Avoid new debt, job changes and unexplained large deposits until you close. Underwriting will check these again.

Pre-approval document checklist

This list follows Fannie Mae’s homebuyer checklist. Your lender may ask for more or less depending on your income type. Fannie Mae’s underwriting rules, for example, require the most recent paystub to be dated no earlier than 30 days before the application, and W-2s covering the most recent one or two years depending on the income type.

Using gift money? Read gift funds for a down payment. Self-employed? See getting a mortgage when you’re self-employed.

Check what you can afford

Before you ask for a letter, see where your income and debts put you:

Common questions

How long is a pre-approval good for?

It depends on the lender. Many letters carry an expiry date, and documents like pay stubs and bank statements go stale. Expect to send updated documents if your search takes months.

Can I be denied after pre-approval?

Yes. Pre-approval isn’t a guarantee. The appraisal, the building review (for a co-op or condo), changes in your finances or a board decision can all stop a loan later. That is why your contract needs a mortgage contingency unless you can close without the loan.

Does pre-approval lock my rate?

Not necessarily. The CFPB says lender policies differ: some lock your rate when they issue a Loan Estimate and some don’t. Page 1 of your Loan Estimate shows whether the rate is locked and until when. See mortgage rate locks.

This guide is general information, not financial advice. Lender requirements vary.