# Pre-approval > Pre-approval is a lender’s written statement of how much it is willing to lend you, based on income, assets and credit it has checked. It strengthens an offer, but it isn’t a guaranteed loan. Also called: preapproval, mortgage pre-approval, pre-approval letter. Topic: Buying a home. A pre-approval letter tells a seller that a lender has already looked at your finances, so your [offer](https://brokerandagent.com/glossary#offer) reads as one that can close. It isn’t a promise to lend, but it’s the closest thing to one before you’ve picked a house. ## Pre-approval vs. pre-qualification: what’s the difference? Lenders use the two words differently, and the Consumer Financial Protection Bureau says not to worry much about the label. The useful difference is evidence. A [pre-qualification](https://brokerandagent.com/glossary#pre-qualification) is often based on what you tell the lender. A pre-approval is based on documents the lender has checked. So judge a letter by what stands behind it. Ask the lender what they verified. A letter backed by pay stubs, tax returns, bank statements and a credit report carries more weight with a seller than one built on a phone call. ## What does a lender check? Expect a credit check and requests for proof of income, such as recent pay stubs, W-2s or tax returns, plus bank statements showing the money for your [down payment](https://brokerandagent.com/glossary#down-payment) and closing costs. If a relative is giving you part of that money, the lender will usually want a [gift letter](https://brokerandagent.com/glossary#gift-letter). From those documents the lender works out your [debt-to-income ratio](https://brokerandagent.com/glossary/debt-to-income-ratio) and checks your [credit score](https://brokerandagent.com/glossary#credit-score) against the loan programs you might use. The result is a maximum loan amount, usually tied to an assumed price, down payment and loan type. ## Does getting pre-approved hurt your credit? A little. A pre-approval usually involves a credit check, and inquiries can lower a score slightly. Shopping around costs less than people fear: the CFPB notes that multiple mortgage credit checks within a 45-day window are recorded as a single inquiry. That makes it reasonable to get pre-approved by two or three lenders in the same few weeks and compare what they offer. ## What doesn’t a pre-approval guarantee? A pre-approval isn’t a loan offer. Final approval comes in [underwriting](https://brokerandagent.com/glossary#underwriting), after you have a signed contract, and it depends on the house too: the [appraisal](https://brokerandagent.com/glossary#appraisal), the title and the insurance all have to check out. It can also fall apart because of changes on your side. New debt, a job change, large unexplained deposits or a missed payment can change the numbers between pre-approval and closing. Until you reach [clear to close](https://brokerandagent.com/glossary#clear-to-close), keep your finances as steady as you can. ## Is the pre-approved amount your budget? Not necessarily. The number on the letter is the most a lender will lend, not what you’ll be comfortable paying. Your monthly payment also includes property taxes, homeowners insurance, any [HOA dues](https://brokerandagent.com/glossary#hoa-dues) and, with less than 20% down on a conventional loan, mortgage insurance. Work out the full monthly payment at a few prices before you shop at the top of your range. ## Common mistakes - Treating the pre-approved amount as a budget instead of a ceiling. - Opening a new credit card or financing a car or furniture before closing. - Assuming a pre-qualification carries the same weight with a seller as a pre-approval. - Letting the letter expire mid-search without sending the lender updated documents. ## Questions ### How long does a pre-approval last? Until the date on the letter, which each lender sets. If it expires, the lender will usually ask for updated pay stubs and bank statements and may check your credit again. ### Can you be denied after pre-approval? Yes. Final approval depends on underwriting, the appraisal and your finances staying the same through closing, so a change in income, debt or credit can still stop the loan. ### Do you need a pre-approval to make an offer? Usually it isn’t required, but many sellers expect one and some won’t consider an offer without it. Ask your agent what sellers in your market expect to see. Calculator: [Mortgage calculator](https://brokerandagent.com/tools/mortgage-calculator) ## Related terms - [Pre-qualification](https://brokerandagent.com/glossary#pre-qualification): Pre-qualification is a lender’s early estimate of how much you might be able to borrow, often based on information you report rather than documents it has checked. It’s quicker than a pre-approval and carries less weight with sellers. - [Debt-to-income ratio](https://brokerandagent.com/glossary/debt-to-income-ratio): Debt-to-income ratio is your total monthly debt payments, including the new housing payment, divided by your gross monthly income. Lenders use it to judge whether you can afford a mortgage, and each loan program sets its own limits. - [Credit score](https://brokerandagent.com/glossary#credit-score): A credit score is a three-digit number, usually from 300 to 850, that predicts how likely you are to repay debt based on your credit history. Mortgage lenders use it to decide whether to approve you and at what rate. - [Underwriting](https://brokerandagent.com/glossary#underwriting): Underwriting is the lender’s review of a mortgage application to decide whether to approve it. An underwriter verifies income, assets, debts and credit and checks the appraisal and title before giving final approval. - [Offer](https://brokerandagent.com/glossary#offer): An offer is a buyer’s written proposal to buy a home at a stated price and terms, including the deposit, financing, contingencies and closing date. Once the seller accepts and both sign, it becomes a binding contract. - [Loan Estimate](https://brokerandagent.com/glossary/loan-estimate): A Loan Estimate is the standard three-page form a lender must give you within three business days of a mortgage application, showing the estimated rate, monthly payment, closing costs and cash to close so you can compare offers. ## Sources - [CFPB: Prequalification vs. preapproval letters](https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-a-prequalification-letter-and-a-preapproval-letter-en-127/) - [CFPB: What happens when a mortgage lender checks my credit?](https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/) Checked 2026-10-02 by the Broker & Agent team. General information, not legal, tax or lending advice. Source: https://brokerandagent.com/glossary/pre-approval