How long does mortgage preapproval take?

A preapproval shows sellers you’re a qualified buyer

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Getting a mortgage preapproval is a key step in the process of buying a home. Before you get attached to those online real estate listings, you should find out the amount you may be able to borrow for a mortgage.

A preapproval guides you in setting a realistic budget (though they might run on the high side, so be sure to do your own calculations). It also demonstrates your financial ability to buy a home. You can seek mortgage preapproval from a lender once you’re fairly serious about taking the next steps.

Mortgage preapproval isn’t an official loan approval, but it’s still wise to secure it prior to shopping for a home, as it may be required by a lender before you can make an offer, says Brian Shahwan, a mortgage banker and broker at William Raveis Mortgage. It’s simple to apply for preapproval, and it could save you a lot of headaches throughout the entire mortgage process, especially in a tight market.

Key insights

Mortgage preapproval is a letter from a lender indicating you’re likely to qualify for a home loan in a specific amount.

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You can use a preapproval to guide your real estate budget and demonstrate your financial readiness to sellers, but it is not a loan or mortgage approval.

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You get preapproval from lenders after submitting information about your income, assets, debts and credit history.

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Preapproval involves lenders verifying your financial documentation, while pre-qualification is typically based on your self-reported information.

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What is a mortgage preapproval?

Although preapproval isn’t officially required before you look for a home, that’s the best time to request mortgage preapproval. A lender will examine financial documents such as your recent W-2s and tax returns and determine an amount you may qualify for with a loan.

Shahwan says that getting preapproval is useful before searching for a new home because it tells you what you qualify for in terms of a loan. He also says that most of the time, borrowers must submit a preapproval letter when submitting an offer to purchase a home.

According to Shahwan, a loan officer can help a potential homebuyer by determining if the subject property has specific qualifications within which the borrowing needs to fit. For example, co-ops, which are housing arrangements where you buy shares in a corporate management company, usually have their own requirements for debt-to-income ratios (DTIs), down payment minimums and credit scores.

“Going through the steps to get preapproval would allow the borrower to understand if they fit within these credentials before putting in an offer or not,” Shahwan said.

In a tight real estate market, including your preapproval letter with an offer is key to demonstrating your ability to buy the home.

Your lender may turn you down for preapproval. This can be frustrating, but it gives you an opportunity to remedy whatever issues the lender had with your preapproval application, such as your debt-to-income (DTI) ratio or credit score.

Mortgage preapproval vs. pre-qualification: What’s the difference?

Preapproval and pre-qualification are often used interchangeably, but there are several key differences:

Shahwan explained that “with the preapproval letter, the borrower’s documents are reviewed by the lender for accuracy, whereas the pre-qualification letter is offered based on the borrower’s self-reported information.”

While these are general guidelines, you might ask your lender to clarify what documents they require and how they distinguish between preapproval and pre-qualification.

Shahwan also said, “While the preapproval letter may carry extra weight in the eyes of a seller, since the buyers’ documents have already been reviewed, both letters are subject to full underwriting approval.” In other words, neither preapproval nor pre-qualification is an official loan.

» MORE: Does mortgage preapproval affect your credit score?

How long does the preapproval process take?

Shahwan noted that the preapproval process is quick. The application itself takes around 10 to 15 minutes to complete, he says, and then the loan officer can review it.

“Depending on how complicated the overall financial situation is, a preapproval can be turned around that same day,” Shahwan said.

Your lender can tell you a timeline, but it is usually not more than 10 business days. For example, Credit Union of Southern California estimates a seven- to 10-day turnaround for preapproval. So while it is a quick process, don’t delay — get preapproval before house hunting in earnest. You don’t want to fall in love with a property only to be edged out by another buyer because you’re waiting on preapproval.

When should you apply for a preapproval?

It’s best to apply for preapproval when you’re ready to begin your house search and make an offer. Most preapprovals are good for up to 90 days.

If you’re only casually thinking about house hunting and it won’t happen for at least three months or more, you’ll want to wait on seeking preapproval, as it can impact your credit.

How long do preapprovals last?

Preapprovals generally last between 30 days and 90 days, depending on your lender. That’s why it’s crucial to get preapproval as soon as possible when you’re committed to searching for and making an offer on a home.

If your preapproval expires, the lender will need to run your application through the process again because your financial situation or credit rating may have changed.

What information is needed for preapproval?

When seeking a mortgage, gather documentation of your finances in order to get preapproval and show sellers you’re qualified to make an offer. Lenders may have slight variations, but typically you’ll need:

  • Social Security number
  • Recent pay stub (electronic or physical copy) with year-to-date earnings
  • Two months of bank checking and savings account statements
  • Investment account statements
  • Two most recent years of tax documents (W-2s, 1099s)
  • Debt statements on all loans (personal loans, credit cards, vehicle loans and more)

If you plan on using gift money for a down payment, you will need a gift letter. If you’ve been renting, the lender might also need references from your landlord.

Preapprovals for self-employed buyers

You may face challenges in getting preapproval if you’re self-employed, but the main requirement is that you show mortgage lenders documentation of your income.

Shahwan explains that for self-employed individuals, there may be nonconventional loan options available. He says that there are programs that look at profit and loss statements or bank statements of small businesses. Profit and loss statements are just what they sound like: a record of revenue, expenses and profits and losses for a company.

These financial documents show lenders how prepared you are to take on a mortgage, making it possible to get mortgage preapproval even while self-employed.

Reducing your debt to improve your debt-to-income (DTI) ratio can improve your chances of getting preapproval and a mortgage. Working to raise your credit score can help, as can meticulously documenting your self-employment history with at least two years of business tax records.

It can be helpful to work with a mortgage broker that has relationships with multiple lenders if you’re looking at nonconventional options geared toward self-employed individuals, Shahwan says.

Look into what banks or lenders offer for self-employed individuals seeking a mortgage. You’ll likely need one or more of the following from the past year, according to First National Bank of America:

  • Form 1099
  • Profit and loss statements that show your income over time
  • Bank statements (both business and personal)

These types of mortgages for self-employed people may also have a higher down payment requirement.

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    What happens if you don’t get a mortgage preapproval?

    Having your preapproval application declined may indicate you’re not quite ready to buy. The Consumer Financial Protection Bureau recommends finding out why you’ve been declined so you can address any problems, such as a poor credit score or specific negative details on your credit report.

    Can you extend your mortgage preapproval?

    If you don’t find the right home within the preapproval window, it’s not the end of the world. “Buyers can absolutely extend their preapproval letter once it expires,” noted Brian Shahwan, a mortgage banker and broker at William Raveis Mortgage. The loan officer will need to go through the application to account for any changes in their financial situation and then generate a new letter, he said.

    Does a preapproval hurt your credit score?

    Preapproval typically requires a hard credit pull, so it does impact your credit score by causing it to drop a few points. However, you can request preapproval from multiple lenders within a 45-day window without causing multiple dings to your credit, according to the CFPB.

    Does having a preapproval letter actually mean I can afford to spend that amount on the purchase of a home?

    Not necessarily. For example, according to a tip on the Bank of America website, “You may qualify to borrow more money than you are comfortable spending on a home. But that doesn’t mean you have to spend more. It’s a good idea to limit your home search to houses priced at an amount you can comfortably afford.” So make sure to do your own homework on what you can and can’t afford to spend on a new home.

    Bottom line

    Mortgage preapproval can be a valuable step in the process of buying your next home. This process offers key information on the type and amount of home loan you’re eligible for, which should direct your home search and help you save time.

    You may ask lenders to clarify their definitions of preapproval versus pre-qualification, but in general a preapproval is a step further along than pre-qualification. Sellers may require preapproval before they accept an offer on a home, so having a letter can improve your odds of getting the home you want.

    That said, be sure to do your own research by checking your budget and considering how much you can truly afford. You might be more comfortable seeking a smaller mortgage than your preapproval amount.

    Article sources

    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:

    1. Bennett Capital Partners, “Understanding Co-op Financing: Mortgages For Co-ops Explained.” Accessed June 11, 2024. 
    2. Credit Union of Southern California, “How long does it take to get a mortgage pre-approval?” Accessed June 11, 2024. 
    3. Consumer Financial Protection Bureau, “Get a preapproval letter.” Accessed May 11, 2024.
    4. Consumer Financial Protection Bureau, “What happens when a mortgage lender checks my credit?” Accessed May 11, 2024.
    5. First National Bank of America, “Mortgages for Self-Employed or Independent Contractors.” Accessed June 11, 2024.
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