What Is Mortgage Preapproval?

Mortgage Preapproval Explained in Less Than 5 Minutes

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how does mortgage preapproval work? fill out a loan application, sign off for a credit check, submit necessary financial documents to lender, if you qualify you'll receive a preapproval letter that is typically valid for a maximum of 90 days

The Balance / Shideh Ghandeharizadeh


Mortgage preapproval is a letter from a mortgage lender outlining the maximum mortgage amount the lender is willing to give you based on certain conditions. The offer is generally only valid provided that your income doesn't change and your credit score remains the same, and it will eventually expire.

Key Takeaways

  • Mortgage preapproval streamlines the homebuying process. You might not land the home of your dreams without it.
  • You can apply for mortgage preapproval by completing a mortgage application. You'll have to provide financial documents such as pay stubs, tax returns, and bank statements, and you must consent to a credit check.
  • You can strengthen your preapproval chances by cleaning up your credit score. Remove any inaccurate information that's hurting your score, and try to pay down your credit card debt.
  • Apply for mortgage preapproval before you start looking at homes so you know how much you can afford.

Having a mortgage preapproval letter tells sellers that you're serious about buying. They may be more willing to negotiate with you if you have the letter in hand. The letter expedites the homebuying process.

Preapproval can set you apart as a buyer in a competitive seller's market when there are more buyers than there are homes available for purchase. Sellers tend to lean toward the sale that's more likely going to go through because the buyer already has the backing of a lender.


Mortgage preapproval is an indication that you'll receive financing for your home purchase, barring any significant change in your circumstances.

How Does Mortgage Preapproval Work?

You can get a preapproval letter by completing a loan application. Lenders will ask you for specific financial documents, such as tax returns, pay stubs, and access to your bank and investment account records.

All lenders have different processes and procedures, but most will require that you agree to a credit check and that you hand over other financial documents as well. Access to your credit history allows the lender to see what you can afford to borrow and reasonably pay back through monthly installments. It could take several days to review your application, depending on how much work is involved with your documents.


Some lenders provide varying levels of preapprovals. Quicken Loans has three tiers of preapprovals ranging from simple to an in-depth approval that includes up to a 90-day rate guarantee.

You'll get a preapproval letter if you qualify based on all this information. The letter is usually valid for a maximum of 90 days but different lenders have different limits for how long their preapproval letters are valid.

Preapproval vs. Prequalification

It's easy to confuse preapproval with prequalification, and these terms do have some similarities, but they have some subtle differences as well. Some banks and lenders use the terms interchangeably.

  • Involves an in-depth look at your credit history, income, and existing debt

  • Involves a hard credit check

  • Is an official document from a lender

  • Is a preliminary analysis based only on the information you provide

  • Does not require a hard credit check

  • Is not an official document

Preapproval will give you an idea of how much house you can afford and which lenders you can potentially work with. It's a more solid prediction of what your mortgage amount could be because it’s based on credit bureau data.

Pros and Cons of Mortgage Preapproval

  • Expedites the homebuying process

  • You can shop around for low rates

  • Expires after a set period of time

  • Doesn't guarantee that you'll get a home loan

  • Dings your credit score

Pros Explained

  • Expedites the homebuying process: If sellers encounter people who like the home but aren't necessarily ready to buy, they're going to keep it on the market for a more solid offer. The faster you can show you're serious about buying the home, such as with a mortgage preapproval, the faster the homebuying process will go.
  • You can shop around for low rates: You don't have to settle for preapproval from the first lender you apply with. You can complete multiple applications with many lenders to determine which will offer you the best interest rate and terms. Credit scoring models like FICO evaluate similar inquiries as one if they're made within a limited period of time. They can tell that you're rate shopping. It will count as one hard inquiry on your credit report rather than multiple score-lowering inquiries if you apply for several home loans within 30 days.

Cons Explained

  • Expires after a set period of time: Mortgage preapprovals don't last forever. Different lenders have different expiration dates. They sometimes run out within 30 days. It could mean that you'll have to re-apply for a new preapproval letter if you don't find a home within that 30-day period, and this could cause your credit score to take another temporary dip.
  • Won't guarantee you a home loan: Mortgage preapprovals aren't approvals. There's still a chance that your finances or other circumstances might change after you get preapproved, so you might not qualify for the home loan when you officially apply.
  • Dings your credit score: Mortgage preapprovals require access to your credit score and history. This is a hard credit inquiry, and it causes your credit score to drop temporarily, although not permanently. This could affect borrowing rates and terms for other loans in the immediate future, such as a credit card or auto loan. You may want to wait a few months after buying a home before applying for other loans or credit.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Quicken Loans. "Get Approved for a Mortgage."

  2. Navy Federal Credit Union. "Mortgage Preapproval."

  3. Consumer Financial Protection Bureau. "What's the Difference Between a Prequalification Letter and a Preapproval Letter?"

  4. myFICO. "How Do Credit Inquiries Affect Your FICO Score?"

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