When Can You Get Preapproved for a Mortgage?

Are you thinking about buying a home? An excellent first step is getting preapproved for a mortgage. Preapproval isn’t required, but it’s a good idea, especially in a seller’s market. Preapprovals are straightforward and simple.

Although preapproval doesn’t mean you have final approval, it will help you know where you stand. And it allows you to explore homes knowing your offer to purchase will get approved. It also gives you time to clear up credit issues which could lower your credit score. 

Knowing when to get preapproved for a mortgage and what the process involves will save you time and money. 

When to Get Preapproved for a Mortgage?

Your preapproval is a dress rehearsal for your actual mortgage application. Based on a review of your finances, including your credit, income history, debts, assets, and other considerations, the lender issues a letter indicating how much the bank or credit union will lend you to buy a house and the interest rate. But unlike a mortgage application, a preapproval doesn’t apply to a specific property.

 You want to carefully time your application when you’re serious about making an offer. Once you submit all necessary documents, it typically takes a few days to generate a preapproval letter. Depending on the lender, your preapprovals will expire within 30-90 days. And each application requires a fee of several hundred dollars. So, if your preapproval expires and you need to reapply, it’ll cost you additional money and take more time. 

Documents Needed for Mortgage Preapproval

Documents for preapproval are also required when you make your final mortgage application. You’ll need to provide proof of identity, such as a passport or driver’s license, and a Social Security Number for each applicant. 

 The lender will access your credit score, which will generate a hard inquiry on your credit report, which typically causes a temporary small drop in your credit score. This second credit check could ding your scores before they have time to bounce back. Keep in mind if your preapproval expires, you will need to reapply. 

Income and Employment

The documents for preapproval verify your income and depend on how you get paid. It’s a little easier if your paycheck is from one source, which provides an annual W-2 form, and if you have little or no overtime or shift differentials.  

  • W-2 Wage Earners. You’ll need to furnish copies of your two most recent pay stubs, bank statements, and tax returns for the past two years. You’ll also be required to provide your employer’s name, address, and hire date. 
  • Self-Employed, Freelancers, and Independent Contractors. If you are self-employed, your income comes from multiple sources, or you have a limited credit history, the lender will average your annual income reports on your two most recent federal income tax returns. The lender may request additional documentation.
  • Real Estate Income. Documentation of rental income, addresses, leases, and current market value of any rental properties is necessary if you plan to use the revenue to qualify for a mortgage.


The lender will want a list of all your assets and value. These assets include anything you have in cash or retirement accounts. And could involve other tangibles and gifts. 

  • Bank Statements. For every account whose assets you use to qualify for the mortgage, you must provide a copy of 60 days’ worth of statements.
  • Brokerage and Retirement Accounts. The lender will need two months of statements from IRAs, investment accounts, CDs, and the quarterly information from your 401(k) showing your vested balance. 
  • Down Payment Funding. You’ll need to document the sources of the money you plan to use for your down payment. Down payment will vary on your loan type. You’ll need to prove you can access cash for 5% to 20% of a potential home purchase price. You’ll need a donor letter if you plan to use a gift to fund your down payment. It must state that your donor doesn’t expect repayment. Gift letters aren’t required for preapproval but will eventually be needed, so it will be good to have them ready.


The lender calculates your debt-to-income ratio. Or rather, do you have more money coming in than is going out, even with the new mortgage expense? A significant component of this will be looking at all of your monthly debt payments. 

  • Payments. Payments include credit card bills, student loans, auto loans, and other expenses. You’ll need to provide each creditor’s name and address, and your account number, loan balance, and minimum payment amount. 
  • Real Estate Debt. If you have a current mortgage, you must provide a recent statement showing the loan number, monthly payment, balance, lender’s name and address, and insurance policy’s declaration page. They will need to know if you own any real estate jointly or solely.

Additional Information

To get a complete picture of your financial situation, the lender must also understand other components of your financial history.

  • Rent. The lender wants to review your renting history if you’re a first-time buyer. Renters need to show the past 12 months of payments. You will also need to provide contact information for any landlord for the past two years.
  • Divorce. If you are divorced, you must furnish your divorce decree, court orders for child support, and alimony payments documents for preapproval.
  • Bankruptcy and Foreclosure. You’ll need to wait anywhere from two to seven years for a mortgage after bankruptcy or foreclosure. Documented proof the foreclosure or bankruptcy happened because of a qualifying hardship may reduce the waiting period.

Why is It Important to Get Preapproved?

Consider a preapproval when you’re in the early stages of house shopping. Who wants to look at a house and want to buy it, only to find out you can’t afford it? Knowing how much you can afford saves time and allows you to target your home search to your price level. It can also keep you from being disappointed.

 Preapproval also provides more negotiating power. Real estate agents and sellers will see you as a serious buyer when you have the backing of a lender.

 Each home can only go to one buyer. When shopping and competing against other buyers, you want to give yourself every advantage. Getting preapproved indicates you’re financially prepared, and if your offer is accepted, there won’t be a lag time to obtaining your mortgage. This assurance is what sellers want to know about potential buyers, especially in a seller’s market.

Get Preapproved with Focus Federal Credit Union

Mortgage preapproval can give you an advantage in today’s red-hot real estate markets. Talk to Focus Federal Credit Union. We’ll help you better understand the process and when to get preapproved for a mortgage.