What Is a Pre-Approval Letter?

A pre-approval letter is a document that indicates how much a lender is willing to loan you for a mortgage if you continue to meet all conditions when you officially apply. Your pre-approval letter is based on the financial information included in your pre-approval application. You’ll still need to submit a formal mortgage application for loan approval before closing. In a 2024 Zillow survey, almost all mortgage buyers (94%) reported getting pre-approved for financing.

In this article:

• How to get a pre-approval letter
• What’s included in a pre-approval letter
• How mortgage pre-approvals work
• Why getting pre-approved is important
• What pre-approval letters look like

How to get a pre-approval letter

A pre-approval letter is a document you receive from a lender if you meet all their borrowing criteria. To get pre-approved, you’ll need to submit an application and up-to-date financial documents to the lender. Here are some steps to take to improve your chances of getting a pre-approval letter.

1. Be ready to buy a home in the next 3 months

Most pre-approval letters are good for 60-90 days. Once you receive a pre-approval letter, you’ll want to find a home before the letter expires. If you’re not actively working with a real estate agent already, compare agent reviews to prepare yourself for the search.

2. Lower your debt-to-income (DTI) ratio

Paying off your debts can make you a more attractive borrower. Lenders prefer borrowers with a DTI of 36% or less, although some lenders accept DTI ratios as high as 50%. You can use Zillow’s DTI Calculator to estimate your current ratio.

3. Gather necessary documents

Pre-approval documents include bank statements, tax returns, and proof of income. You’ll also need personal information, like your social security number and employment details.

4. Consent to a hard credit check

Mortgage loans and lenders all have different credit score minimums to meet pre-approval requirements. Once your credit report is pulled, it is good for 120 days. If there’s anything on your credit report that you don’t recognize, make sure to dispute and resolve errors. You can check your credit for free without a hard pull before you apply to fix any problems before you submit your application.

5. Complete a pre-approval application (or three)

To increase your chances of pre-approval, submit an application to multiple lenders. Different lenders have different criteria. If you’re denied by one, you may be pre-approved by another. While the typical buyer gets one lender pre-approval, about a third (32%) reported getting pre-approved by two or more lenders. As long as you apply to each lender within 45 days, all credit hits will be consolidated into one single hit.

6. Wait for the lender to process your application

Most lenders can provide you with a pre-approval letter the same day you submit your application. Sometimes more information is needed, in which case it may take 1-2 business days or longer after you apply, before you hear back from the lender about your mortgage pre-approval status.

You can start the pre-approval process with us at Zillow Home Loans*. Most borrowers receive a pre-approval letter the same day they apply. 

What is included in a pre-approval letter for a mortgage?

A pre-approval letter includes information about the borrower, lender, and the loan requested. Here is a list of everything that should be included in your pre-approval letter:

• The borrower’s full name, social security number, and contact details.
• The lending institution’s name, point of contact, and loan officer’s ID number.
• The type of mortgage loan you’re pre-approved for (conventional, FHA, VA, etc.)
• The fees associated with the type of loan you’re seeking.
• The loan amount you might be approved for if all conditions are met.
• The conditions you need to meet to receive a final loan approval.
• The interest rate you might be approved for based on your credit score and financial profile
• The length of time the pre-approval letter is valid (usually 60-90 days)

How does a mortgage pre-approval work?

Lenders issue pre-approval letters the same day, or 1-2 business days, after a borrower submits an application. Once you receive a pre-approval letter, you’ll have 60-90 days to use it. If your pre-approval letter expires before you make an offer on a home, you'll need to reapply and get pre-approved again. 

The amount you get pre-approved for depends on your financial standing. Pre-approval applications typically require borrowers to provide paystubs, W2s, and bank statements to verify your financial information. A borrower’s debt-to-income is then calculated based on the credit report. 

What is the purpose of a pre-approval letter?

Pre-approval letters show the maximum amount a lender will allow you to borrow if all loan criteria are met. This helps you understand your purchasing power and guides your home search. Getting pre-approved allows you to focus on homes within your price range and avoid looking at homes you can’t afford. A best practice is to get pre-approved at least 90 days before you plan to buy. 

When it comes time to make an offer, a pre-approval letter strengthens your position as a buyer. A pre-approval shows sellers and agents that you’ve already started the mortgage application process and have at least one lender interested in financing your home purchase. If you’re serious about buying a home, getting pre-approved is worth it.

Do you need a pre-approval letter to make an offer on a home?

No, you don’t need a pre-approval letter to make an offer on a home, but it’s in your best interest to include a pre-approval letter with your offer. Pre-approvals show sellers and agents the buyer is committed and prepared to purchase a home.

Sellers and agents prefer to work with pre-approved buyers, because the likelihood of closing on the deal is greater with a buyer who has been pre-approved. If the seller accepted a buyer’s offer without pre-approval, there’s a greater chance the deal may fall through due to financing issues.

Once you’ve found the right home, ask your agent to include your pre-approval letter in your offer. Including a pre-approval letter with your offer can help you close on a house faster, especially in a seller’s market when sellers receive multiple offers for a limited number of properties.

Can you be denied after receiving a pre-approval letter?

Yes, you can be denied a mortgage loan after getting pre-approved. A pre-approval letter doesn’t guarantee you’ll get approved for a mortgage loan. You can get denied for several reasons, including significant income changes, negative credit reports, or low property appraisals. To improve your chances of being approved after pre-approval, be upfront with lenders about your financial situation. Report any income changes, new debts or other new information. The lender will find out about these changes during the full loan approval process, so it’s best to be upfront.

What does a pre-approval letter look like?

A pre-approval letter is typically a one-page document with a date, borrower name, and loan ID number located in the top right corner. The majority of the document contains information about the loan being pursued and the conditions that need to be met to get approved. 

*Zillow Home Loans, an equal housing lender. NMLS #10287