How long does a mortgage pre-approval last?
A mortgage pre-approval may be good for up to 90 days, depending on the lender and market conditions.
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Amy Fontinelle has spent more than four years covering personal finance and is an expert on budgeting, credit cards, mortgages, insurance, and taxes. She has bylines at The Motley Fool, Reader's Digest, and Bankrate.
Updated September 12, 2024, 3:14 PM EDT
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Reina Marszalek is a senior mortgage editor at Fox Money who has spent more than 10 years writing and editing content.
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A mortgage pre-approval is a conditional commitment from a financial institution to lend you money to buy a home. Getting pre-approved is an important step in the homebuying process because it tells you whether you’re eligible for a home loan and how much you’re able to borrow. Additionally, a mortgage pre-approval letter puts you a few steps ahead of buyers who haven’t got one, an edge that could benefit you in a competitive market. Though new listings are up 10.2% from last year, according to Redfin, demand for homes still far outpaces supply.
What is a mortgage pre-approval and how does it work?
When lenders pre-approve you for a mortgage, they’ll give you a pre-approval letter. You can show this to home sellers to prove you’re serious when you make a purchase offer. The letter will show what type of loan you’re eligible for, such as a conventional loan or FHA loan. It will also include how much you’re eligible to borrow.
A pre-approval letter is not the same as a mortgage loan, but it shows how much a lender is willing to approve you for. The lender reviews your financial documents — including your income, debt, and savings — and provides you with the amount you could borrow in your situation. There is usually a hard credit inquiry when you apply for a pre-approval.
Your pre-approval letter — or letters, if you’ve applied with several lenders — can be a useful tool as you begin shopping for houses. It can help you zero in on your home budget because you know how much you’re likely to get approved for when you apply for the loan. It can also assure sellers that you’re a serious buyer.
Tip:
Some lenders let you tailor your pre-approval letter for each offer so buyers don’t learn whether you’re able to pay more than you’re offering.
Pre-approval vs. prequalification: Key differences
Pre-approval isn’t the same as prequalification, though you’ll probably encounter both as you shop for a mortgage. A pre-approval is a more involved step you might take when you are ready to shop for a house and prepared to make an offer. Prequalification, on the other hand, will help give you a general budget at the outset. Here’s the difference between the two:
Keep in mind that a hard inquiry means the lender will pull your credit report to determine whether to approve you. This will lower your credit score by a few points because it indicates you’re preparing to take out a new debt. A soft credit inquiry doesn’t affect your credit.
Whether you obtain one or both of these depends on your situation. You could get prequalified early to get a general idea of your budget before you start your home search. The rough estimate will help determine how much house you can afford, and possibly what neighborhood you’ll be shopping in. However, prequalification won’t have any details like your loan amount or terms.
A pre-approval letter shows the tentative amount the lender would be willing to extend you. It shows sellers that you’re a serious buyer, and you have financing all but secured. You’ll still need to apply for the loan after your offer has been accepted. Prequalification won’t be as useful when you’re negotiating with sellers; it’s largely for your own informational purposes.
When should you apply for a pre-approval?
The best time to apply for a mortgage pre-approval is before you start shopping for a home, for several reasons:
- Give yourself time: If you can’t get pre-approved or your pre-approval amount is too low, you’ll have time to improve your finances before you get your heart set on a certain neighborhood or property.
- Know your budget: Pre-approval gives you a target shopping price range.
- Prepare to make an offer: Pre-approval allows you to act quickly and confidently to make an offer when you find the right home.
Even though pre-approval letters expire, getting pre-approved several months before you want to buy can be a good idea. It will give you more time to fix any problems lenders identify with your finances. An experienced loan officer or nonprofit housing counselor can help you understand what these issues are and how to work on them.
How long does a mortgage pre-approval last?
A mortgage pre-approval is usually good for 30 to 90 days (and up to 120 days with some lenders). Since market conditions and people’s finances can change, lenders put an expiration date on these letters. But if you don’t buy a home before the pre-approval expires, it’s not a big deal: You can get a new one.
Contact your loan officer and let them know you want to extend or renew your pre-approval. Typically, you’ll need to submit more recent versions of the bank statements and paystubs you provided before. If interest rates have changed or your financial situation has changed, you might get pre-approved for a different amount.
Remember that your pre-approval is conditional. Final approval will depend on your financial circumstances at the time when a seller accepts your offer (and all the way until closing). It will also depend on the property you choose and whether the appraisal is high enough.
How to get a mortgage pre-approval
Applying for a mortgage pre-approval might make you nervous, and the steps might feel tedious. The good news is that applying isn’t hard, and knowing the steps before you go through the process can make it easier. Here’s what’s involved:
- Choose several lenders: It’s best to seek pre-approval from lenders you actually want to work with. Get recommendations for at least three to five mortgage lenders so you’ll have options and can shop for the best deal.
- Gather your financial documents: Lenders will want to know how much money you make, how much money you have, and how consistent your income is. You’ll need to provide your two most recent signed tax returns and bank statements, plus proof of income such as W-2 forms, 1099s, alimony or child support documentation (if applicable), pay stubs, and profit and loss statements (if you’re a business owner).
- Call or apply online: Try to set aside some uninterrupted time when your mind is clear. This will help you get through the process faster and with less stress. You’ll also be less likely to make a mistake that could slow down the pre-approval process.
- Wait for a response: Getting pre-approved can take a few hours, a few days, or more than a week, depending on the lender. If your mortgage application is denied, find out why and fix any issues with your credit or finances that they tell you about.
You can improve your chances of getting pre-approved by getting your finances in order. Here are some dos and don’ts that can help:
Dos
- Do check your credit reports and scores.
- Do make all your loan payments on time.
- Do try to lower your credit utilization.
- Do ask for a raise or promotion.
- Do make sure you’ve filed your tax returns.
Don'ts
- Don’t apply for new loans or cosign anyone else’s.
- Don’t take on new recurring expenses.
- Don’t spend down your savings.
- Don’t change career paths — but changing jobs in the same line of work should be okay.
- Don’t make large transfers into or out of your bank accounts.
Mortgage pre-approval FAQ
How does a pre-approval affect my credit score?
Applying for a mortgage pre-approval, like applying for other types of credit, may reduce your credit score by a few points. Submitting multiple applications within a few weeks of each other should have the same impact on your score as submitting a single application, according to the Consumer Financial Protection Bureau.
What are the benefits of a pre-approval?
Getting pre-approved for a mortgage shows you what your budget is before you start shopping for a home. It also allows you to submit stronger offers to sellers. Plus, the more your lender knows about your finances up front, the faster you may be able to close.
What determines my pre-approval amount?
Your pre-approval amount will be based on your debt, income, assets, savings, credit history, and credit score. The lower your debt-to-income ratio (DTI) and the higher your credit score, the more you’ll be able to borrow. Existing assets and savings also make you a stronger loan candidate.
Can I make an offer that is higher than my pre-approval amount?
Yes, you can make an offer that is higher than your pre-approval amount if you have cash to pay the difference. Your pre-approval amount shows how much you can borrow, not how much you can spend. A common scenario where your offer will be higher than your pre-approval amount is if you’re making a down payment and borrowing the maximum you’re approved for.
What happens if I don’t use my pre-approval?
If you don’t use your pre-approval, it will expire. You can always apply again when you’re ready. You’ll have to submit recent versions of your financial statements when you reapply.