How to Get Preapproved for a Mortgage - NerdWallet (2024)

FAQs

How far in advance should I get pre approved for a mortgage? ›

Some mortgage lenders recommend reaching out for preapproval as early as 12 months before you plan to buy a home to get a head start on addressing any issues that might come up.

Getting preapproved for a mortgage requires a hard credit pull, which can lower your credit score. However, the drop in score is fairly minimal and only temporary. For most people, the benefits of preapproval outweigh this drawback.

While prequalification is a good first step, it typically won't carry as much weight as a preapproval because a lender hasn't verified your information. Going beyond prequalification and getting preapproved by a loan officer is a critical step that shows you're serious about buying a home.

Down Payments

You don't need to estimate your down payment during pre-qualification, but you do need it for pre-approval.

No—they may involve a soft inquiry, which won't affect your credit score. If you are pre-approved for a specific card you will receive an offer. The offer itself doesn't generate a hard inquiry, so don't worry—just because you have the offer doesn't mean you've hurt your score.

A mortgage pre-approval affects a home buyer's credit score. The pre-approval typically requires a hard credit inquiry, which decreases a buyer's credit score by five points or less. A pre-approval is the first big step towards purchasing your first home.

However, even though prospective homebuyers get pre-approved for a mortgage before shopping for homes, there's no 100% guarantee they'll successfully get financing. Mortgages can get denied and real estate deals can fall apart — even after the buyer is pre-approved.

For a conventional mortgage in California, you typically need a minimum score of at least 600. If you qualify for certain government-backed loans, however, you may be able to buy a home with a score as low as 500.

How many places should you get preapproved for a mortgage? ›

In fact, you can — and should — get preapproved with multiple lenders. Many experts recommend getting at least three preapproval letters from three different lenders. Each mortgage lender will give you a unique offer with its own interest rates, loan amounts, origination fees, and other upfront closing costs.

In theory, it can be, but it's still important to consider all of your options. When choosing a lender, we recommend that all prospective buyers get pre-approved by multiple lenders and use the following criteria to evaluate them: Compare rates and fees. Look through testimonials and reviews.

An individual earning $60,000 a year may buy a home worth ranging from $180,000 to over $300,000. That's because your wage isn't the only factor that affects your house purchase budget. Your credit score, existing debts, mortgage rates, and a variety of other considerations must all be taken into account.

A $250,000 home, with a 5% interest rate for 30 years and $12,500 (5%) down requires an annual income of $65,310.

So, by tripling the $15,600 annual total, you'll find that you'd need to earn at least $46,800 a year to afford the monthly payments on a $200,000 home. This estimate however, does not include the 20 percent down payment you would need: On a $200K home, that's $40,000 that needs to be paid in full, upfront.

There are nearly no adverse effects from getting pre-approved too early. The only slight risk is that your credit score drops – less than five points, says MyFico. Your credit score could drop if your lender pulls a new report every 90 days, so ask your lender not to pull credit again until you've found a house.

Generally, preapproved offers, such as those from credit card issuers, don't directly impact your credit score. But once you accept the preapproval, the lender will likely review your credit history as part of a more thorough final approval process, which will result in a hard inquiry.

With that being said, this impact is minimal and its effects should be temporary. If you already have a good credit score, getting two or three pre-approvals within a short timeframe shouldn't negatively affect your borrowing options.

If you are pre-approved or credit pre-approved for a loan before you start the home shopping process, your mortgage could close in as little as two to three weeks after your offer is accepted on a home.