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What Is a Preapproval Letter?

Updated: Jun 15

The Pre-Approval Letter is a document from the lender of your choice that indicates how much of the mortgage you have been pre-approved to borrow.

This is one of the first pieces of documentation you need before you go on a home hunt because it shows that you are a serious buyer who has the financial capacity to buy a home.

All preapproval letters will contain the same key details:

Loan program

Loan type

Amount of the loan

Maximum purchase price

Qualified interest rate

How long the offer will last

Before making a mortgage Pre-approval decision, lenders will consider a number of key factors:

Debt-to-income (DTI) ratio

Loan-to-value (LTV) ratio

Credit history

FICO score


Employment history

List of documents you must submit in order to obtain pre-approval or final loan approval prior to closing:

60 days of bank statements

30 days of pay stubs

W-2 tax returns from the previous two years

Schedule K-1 (Form 1065) for self-employed borrowers

Income tax returns

Asset account statements (retirement savings, stocks, bonds, mutual funds, etc.)

Driver’s license or U.S. passport

Divorce papers (to use alimony or child support as qualifying income)

Gift letter (if funding your down payment with a financial gift from a relative).

It will take 24 to 72 hours for the request to be processed. Once completed, the letter will indicate how much can be borrowed and the terms of the loan.

Getting preapproved is important because it helps you shop for a home. But at this stage, lenders aren’t in a position to give you enough information for you to make a decision about which lender offers the best deal.

Visit our sources page to learn more about the Real Estate procedure.

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