What is mortgage preapproval?
A mortgage preapproval is a lender's preliminary assessment of how much it may be willing to lend based on financial information available at that time. It can help establish a realistic shopping range, but it is not a guarantee that a loan will ultimately close.
What may a lender review?
Requirements vary, but lenders commonly review income, employment, assets, existing debts, credit information and the amount available for a down payment. Final approval can also depend on the property, appraisal, documentation and updated financial information.
Prepare before applying
Review your budget, organize income and asset records, check your credit information for errors and avoid assuming that the largest amount offered is automatically the most comfortable amount to borrow.
Preapproval vs affordability
A lender's potential loan amount and your personal budget answer different questions. Your own affordability analysis should consider housing costs, other debts, savings goals and room for unexpected expenses.
Useful Numelios tools
Start with the Home Affordability Calculator, then compare payments with the Mortgage Calculator and review your debt-to-income ratio.
General educational information only. Lending standards and preapproval processes vary by lender and borrower.