Mortgage preapproval could take a couple days or up to a couple weeks depending on the lender and the effort required to verify the necessary financial information. Though mortgage preapproval isn’t a requirement, getting preapproved can help determine your home-buying budget and having a preapproval letter in hand demonstrates to sellers that you’re a serious buyer.
Here’s a closer look at how mortgage preapproval works, including how long preapproval lasts and steps to potentially speed up the process.
Key Points
• Obtaining a mortgage preapproval typically takes around 10 days, but can vary.
• Preapproval helps set a home-buying budget and indicates a potential interest rate.
• Preapproval demonstrates financial readiness to sellers, making you a more reliable buyer.
• Prequalification is quicker and less rigorous, offering a preliminary estimate.
• Factors affecting preapproval include credit score, debt-to-income ratio, down payment, and employment status.
What Is a Mortgage Preapproval?
A mortgage preapproval is a letter or statement from a mortgage lender that indicates that you are conditionally approved to borrow up to a certain amount for a home purchase. It generally includes the type of mortgage loan you would likely qualify for and the interest rate you’d get if you ultimately apply for a mortgage.
Whether you’re buying your first home or in a competitive market, having mortgage preapproval gives some assurance to sellers that your financial ducks are in a row to buy a home. Maybe you aren’t buying in one of the best affordable places in the U.S. — in that case, it can be especially helpful to have preapproval as a guide to what you can actually afford. For many buyers, it can be advantageous to get preapproved before you start looking at properties so you’re prepared to make an offer.
You need to submit an application to get mortgage preapproval. This usually entails a hard credit check and submitting documentation related to income, assets, and debts.
How Long Does It Take to Get Preapproved?
The sooner you get preapproved, the sooner you can get serious about house-hunting. So how long does it take for mortgage preapproval?
After you submit your application, the mortgage preapproval process can take around 10 days to complete. Lenders will review the financial documentation submitted with your application, run a hard credit check, and potentially verify your employment.
Gathering the necessary financial information and completing the application itself can take some initial legwork. Before applying, you might also spend time browsing lenders to compare options and find mortgage terms that best fit your needs, so it’s worth factoring these steps into your timeline.
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How Long Does a Mortgage Preapproval Last?
When a lender issues a mortgage preapproval letter, it’ll include the period of time the preapproval is good for. Typically, mortgage preapproval lasts for 60 to 90 days, though it’s possible that lenders could impose a shorter time limit.
Mortgage preapprovals expire because interest rates and a borrower’s financial situation are subject to change over time. Employment status or savings levels can change with the ups and downs of the job market and cost of living in the U.S. Getting your preapproval renewed may require less work than the initial application, but it may involve another credit check and resubmitting financial documents. Keep in mind that significant financial changes could impact how much you qualify for.
Is Preapproval the Same as Prequalification?
You may hear the terms preapproval and prequalification used interchangeably. While both can give you an idea of how much house you can afford, there are key differences between the two. Here’s a quick look at mortgage prequalification vs. preapproval:
Mortgage prequalification involves a high-level review of your finances to get an estimate of how much you might be able to borrow, and at what interest rate. Unlike mortgage preapproval, prequalification doesn’t include a hard credit check and you won’t be required to submit financial documents like tax returns.Typically, you’ll need to just provide the lender with details on your income, employment, monthly debts, and anticipated down payment.
Getting prequalified is a quicker process than preapproval, since your information doesn’t require the same level of verification by the lender. Thus, prequalification is less of a guarantee that you’ll qualify for financing, but it can be used to inform your home-buying budget.
How Long Does Mortgage Approval Take After Preapproval?
Suppose you’re preapproved and have your offer on a house accepted. How long will it take to get approved for a mortgage to get to the closing table? Mortgage approval can take anywhere from 30 to 60 days, though lenders often aim to time the approval with your closing date in the contract.
Even if you’re preapproved, you’ll need to complete a home loan application with your chosen lender. You’ll finalize your choice of the type of home loan and your mortgage term.
Once your materials are submitted, the lender has several steps to complete. They’ll order a title search and an appraisal to determine whether the offer price matches the property value. This is also when the underwriting process occurs, which involves verifying your financial information and qualifications as a borrower. Though it’s optional, a home inspection would be completed at this stage, too.
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Factors Affecting Mortgage Preapproval
Lenders consider a variety of financial information before issuing mortgage preapproval. Here are several of the key factors for getting preapproved.
• Credit score: Lenders use your credit score to assess your risk as a borrower. Credit score requirements vary by lender and mortgage type. If you qualify as a first-time homebuyer, for instance, you could be approved for an FHA loan with a credit score of 500.
• Debt-to-income (DTI) ratio: How much home you can afford is determined in part by your DTI ratio, which is calculated by dividing your monthly debt payments by your gross monthly income. A DTI ratio of 36% or lower is considered good, though it may be possible to get preapproved with a higher DTI ratio.
• Down payment: Having enough money to cover a down payment and closing costs is another important factor. Certain government-backed loans have no down payment, while jumbo loans require 10% down. Closing costs can range from 2% to 5% of your mortgage principal.
• Employment: Your income and employment history are considered when a lender assesses your ability to repay the loan.
How to Speed Up the Preapproval Process
The mortgage preapproval process can vary by lender. When comparing mortgage options from different lenders, you can also look into the expected timeline for preapproval.
Having all the necessary documents prepared could help speed up the process. The lender will likely require that you submit the following materials and information:
• Proof of identity: A valid driver’s license, passport, or other government-issued ID.
• Proof of income and employment: Pay stubs, tax returns, and bank statements if self-employed.
• Proof of assets: Bank statements, investment account statements, and gift letters from family, if applicable.
• Debt and expenses: Documentation of student loans, auto loans, and any other recurring debt or monthly expenses.
The Takeaway
How long does preapproval for a mortgage take? It can require anywhere from a couple days to a couple weeks, so it’s smart to plan for around 10 business days. However, having all the necessary personal and financial information ready can help speed up the preapproval process. Once preapproved, you’ll have a good idea of how much house you can afford, which can inform your house hunt.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
How quickly can you get preapproved for a mortgage?
Some borrowers get preapproved for a mortgage in as little as a couple days, though the process doesn’t always move this quickly. It may take some time for lenders to verify your financial information and issue a preapproval letter.
How long does preapproval usually take?
The typical timeline for mortgage preapproval is around 10 days. However, delays can occur due to missing documents or delays in verification by an employer.
Do mortgage preapprovals hurt your credit score?
Mortgage preapproval involves a hard credit check which stays on your credit report for up to two years. This could put a temporary ding in your credit score — usually less than five points — for up to a year.
Is a preapproval a final approval?
Mortgage preapproval is not a guarantee for final approval on a mortgage. Borrowers still need to submit a mortgage application after having an offer accepted on a property.
Can you be denied after preapproval?
Yes, you can be denied after being preapproved for a mortgage due to changes in employment or personal finances. Borrowers can also be denied because of issues with the property itself or an appraisal that comes in below the purchase price.
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