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Getting preapproved for a mortgage is a great start to the homebuying process. A mortgage preapproval gives you some peace of mind and a competitive edge, helping you secure the home of your dreams.

However, not all preapprovals are the same. If you want to qualify for a preapproval instantly without affecting your credit, here’s what you need to know.

In this post:

What is a mortgage preapproval?

A mortgage preapproval is a letter from a mortgage lender or broker that details how much money a lender is able to lend to you, based on certain assumptions about your creditworthiness and credit history. For example, a lender or broker might say that, based on your current credit score and income, the preapproval letter supports a mortgage up to $250,000 in value.

In the preapproval letter, you’ll see an estimate of your mortgage loan amount, interest rate, and what your monthly payment would be, based on the assumptions made regarding your creditworthiness and credit history.

To decide whether or not to issue a mortgage preapproval, lenders or brokers typically assess the following information:

  • Assets: How much you have in assets, including cash in your checking or savings account, stocks and bonds, and real estate
  • Income: Whether your income is sufficient to cover the cost of your mortgage — typically, they’re looking to see that you have a debt-to-income ratio (DTI) below 50%, but ideally, your DTI is 43% or below
  • Credit history: Credit check to review your credit report (the lowest interest rates are reserved for those with excellent credit)

Getting preapproved with Credible vs. traditional lenders

Depending on the lender, the preapproval may be valid for approximately 30 days. After that, your credit score could change, which would affect your mortgage preapproval.

If the homebuying process takes several months, you’ll likely need to get several preapprovals which can take a lot of time. But with Credible, you’re able to sign back into your dashboard and generate a new prequalification letter to present to your realtor in seconds.

Our process allows you to make changes to your down payment, amount of loan, and property address without having to put your information in each time. This way, you can easily create a new preapproval letter for multiple scenarios should you need it.

Traditional lendersCredible
How long does it take?1 to 3 days3 minutes
Credit checkHard credit pull
(negative impact on your credit)
Soft credit pull
(no impact on your credit)
Online processTypically minimal; instead processed via in-person visit at a branch or phone call with a licensed loan officer100% online
Compare multiple lenders?No, visit multiple lenders to receive multiple preapproval lettersYes, preapproved across multiple lenders at once
Multiple preapproval letters to make additional property offers?No, must submit another request to lender for new preapproval letterYes, generate additional letters instantly with a customized loan amount

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What are the benefits of having a mortgage preapproval?

Qualifying for a mortgage preapproval has several benefits:

  1. You’ll know how much home you can afford. Having a preapproval can give you a solid idea of how much home you can really afford. That can help you narrow down your home search, so you don’t stretch your budget too far.
  2. It makes you more desirable. If you’re considering putting an offer on a house, having a mortgage preapproval is essential. Otherwise, you risk being overlooked because home sellers won’t see you as a serious buyer and will choose someone else.
  3. Agents will be more willing to work with you. Many real estate agents won’t work with buyers who don’t have preapproval letters, putting you at a huge disadvantage.

How to get preapproved for a mortgage

With some preparation and homework, the mortgage preapproval process can be a breeze. You can get preapproved in five easy steps:

  1. Budget for a down payment
  2. Gather the information you’ll need
  3. Comparison shop with multiple lenders
  4. Limit your debt and stay current on your bills
  5. Submit your loan application

1. Budget for a down payment

The more money you can put down, the lower the interest rate and monthly payments will be. If you put down less than 20% of the home’s purchase price, you’ll have to pay for private mortgage insurance (PMI) on top of the cost of the home loan.

The type of mortgage you apply for will affect how much of a down payment you’ll need. For example, for most mortgages, you’ll need to put down 3% to 20%. But if you qualify for a Federal Housing Administration (FHA) loan, you can put down just 3.5%.

Credible makes this easy, allowing you to adjust your down payment and figure out how much home you can afford by simply adjusting a slider.

Disclaimer: This is a simulated scenario for illustrative purposes to demonstrate how the Credible Streamlined Pre-approval process works. These are not actual terms that are available.

2. Gather the information you’ll need

Depending on where you get your preapproval letter, traditional lenders require you to upload your documents upfront.

But if you choose to get a preapproval letter online with Credible, the process is much quicker. Instead of having to upload documents or bring in copies, you’ll just need to have your information on hand so you can type it in.

Here’s some of the information you should have ready:

  • Proof of income: Such as pay stubs or W-2 forms
  • Federal income tax returns: Your tax returns for the past two years
  • Bank and investment account statements: Bank and investment account statements that show your current balances and contributions
  • Driver’s license or passport: Some form of identification
  • Debt statements: Any outstanding debt statements that show your remaining balance and monthly payment, like student loans

3. Comparison shop with multiple lenders

It’s a good idea to compare offers from several different lenders to ensure you get the lowest mortgage rates. If you choose to get a mortgage preapproval from a bank, you typically have to go into a bank branch and it requires a hard credit inquiry (which can affect your credit score).

But with Credible, you can secure a preapproval letter in just three minutes across multiple lenders. Plus, Credible uses a soft credit check which won’t affect your score.

4. Limit your debt and stay current on your bills

Your preapproval is dependent on your current credit score, debt, and income. Between your preapproval and your loan application, try to keep your debt levels steady, or pay off the debt if possible. Running up credit card debt or taking out a loan could negatively affect your credit score and debt-to-income ratio, reducing how much you can borrow in the form of a mortgage.

It’s also a good idea to ensure your income remains the same — so be sure you have the same employer and income throughout the process.

Your credit score is largely determined by your payment history, as well. So, to avoid a decrease in your credit score — which could ruin your mortgage preapproval — make sure you make all of your payments on time during the entire mortgage process.

5. Submit your loan application

Once the offer on your house is accepted, you can apply for a home loan. With Credible, you can complete the whole process online in just a few minutes.

Getting preapproved for a mortgage can make you a more desirable buyer, and can give you an idea of how much you can really afford to spend on a home, depending on your financial situation. By following the above steps, you can navigate through the process smoothly and be on your way to buying your dream home.

Ready to get preapproved?

  • Instant streamlined preapproval: It only takes 3 minutes to see if you qualify for an instant streamlined preapproval letter, without affecting your credit.
  • We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.
  • A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.

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Keep in mind that not all loan products are available through Credible.

About the author
Kat Tretina
Kat Tretina

Kat Tretina is an authority on student loans and a contributor to Credible. Her work has appeared in publications like the Huffington Post, Money Magazine, MarketWatch, Business Insider, and more.

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