Mortgage preapproval

Mortgage preapproval is a written letter from a lender saying the borrower is likely to qualify for a loan up to a stated amount, based on a credit pull and reviewed financial documentation. It's the standard credibility signal a buyer brings into making offers.

How it works: to get preapproved, the borrower submits an application, authorizes a credit pull, and provides documentation, typically pay stubs, W-2s or tax returns, and bank statements. The lender reviews the file, runs it through automated underwriting, and issues a letter stating the maximum loan amount the borrower qualifies for at current rates. Letters typically have an expiration date (60 to 120 days) and list outstanding conditions.

Why it matters: in most markets, sellers won't seriously consider an offer without a preapproval letter. The letter says the buyer has the financial capacity to actually close. Preapproval is also the natural moment to shop multiple lenders, since the work to produce a preapproval (credit pull, documentation review) overlaps with what's needed to compare Loan Estimates.

Common gotcha: not all preapprovals are created equal. A "fully underwritten" or "TBD approval" preapproval (where the lender has already run the file through underwriting before there's a property) is meaningfully stronger than a basic letter generated after a phone-call income check. In competitive markets, listing agents read preapproval letters carefully and prefer offers backed by stronger preapprovals.