Pre-Approval Guide

Most buyers stop at the middle row because it is what a lender offers by default and it is enough to be taken seriously. In a multiple-offer situation the top row is what separates two otherwise identical offers, and it costs nothing except doing the work earlier.

Ask your lender specifically for a fully underwritten approval rather than a preapproval, and ask them to say so in the letter. Many lenders will do it and almost nobody asks.

Your file is re-verified before closing, not just at approval. A car financed during escrow, a new credit card, a furniture instalment plan for the home you have not yet bought: each changes your debt-to-income ratio and can turn an approved file into a declined one in the final week.

Large unexplained deposits are the quieter version. A lender has to source your funds, so a gift from a relative or a transfer between your own accounts needs a paper trail. Move nothing you cannot explain in writing, and if somebody is helping you with the down payment, tell your lender now rather than at signing.

Expect recent pay records, a couple of years of tax returns, statements for every account you are drawing on, and identification. Self-employment, bonus and commission income, and equity compensation all need more, because the lender is establishing not just what you earned but whether it will continue.

Gather it before you start looking rather than during. A buyer who can send a complete file the same afternoon can get an underwritten approval in days; one who is chasing a 2024 tax return is still waiting when the house they wanted goes into escrow with somebody else.

The system is deliberately built so that shopping for a mortgage is not penalised the way opening several credit cards would be. Get your quotes close together and it counts once.

What does move your score is what you do with the accounts you already have. In the months before buying: pay balances down, open nothing new, close nothing old, and dispute nothing that is minor. Score improvements before an application are worth more than negotiation afterwards.

Jumbo files are underwritten by a person rather than a system, with more documentation and often a second review, and the requirements vary considerably between lenders. A preapproval that would take days on a conforming loan can take substantially longer here.

Which makes the underwritten approval more valuable above the line, not less. A jumbo buyer who is fully underwritten before offering has removed the exact risk a seller is worried about.

Refreshing it is routine and usually quick, so an expiring letter is an administrative matter rather than a setback. What matters is not turning up to an offer with an expired one, which reads as disorganised at the exact moment you want to look prepared.

If your search runs long, ask your lender to keep the file current rather than letting it lapse and rebuilding it. It is much less work for everyone.

Two things sit outside your file entirely. The property has to appraise and, if it is a condominium, the project itself has to be acceptable to the lender. Either can stop a loan on a buyer whose own approval is flawless, which is why both are worth asking about early on any specific home.

None of that makes the letter weak. It makes it a strong starting position rather than a finish line, and understanding the difference is what keeps a buyer calm during the parts of escrow that feel uncertain.

The common reasons are a debt-to-income ratio slightly over, a credit issue that can be corrected, or income that has not been documented in a way the lender can use. Each has a route, and the written reasons tell you which one you are in.

What we would say plainly: a decline from one lender is not a verdict. Lenders differ on self-employment, on recent job changes and on how they treat variable income, and a file that fails at one can pass comfortably at another. Take the letter to a second lender before you conclude anything.