Step 6: Get Pre-Approved for a Mortgage Loan

Why Pre-Approval Matters

Before you start visiting homes or dreaming about your favorite kitchen layout, you need to understand your buying power. That starts with mortgage pre-approval.

A pre-approval is a letter from a lender that says how much money you are qualified to borrow. It is based on your income, debts, credit history, and available savings. Getting pre-approved helps you:

• Know your price range
• Make stronger offers
• Avoid delays when it is time to close
• Understand the loan options that work best for your budget

Let’s walk through the mortgage pre-approval process step-by-step so you know exactly what to expect.

1Check Your Credit Score and Improve It If Needed

Your credit score plays a big role in whether you get approved and what interest rate you receive. Lenders use it to judge how likely you are to repay your loan.

➤ Check Your Score

You can check your credit score for free through services like Credit Karma, your credit card provider, or annualcreditreport.com.

➤ Understand What It Means

• Excellent (740+) – I’ve built strong credit
  You’ve got a great credit track record. This usually means lower rates and more loan options.
• Good (680 – 739) – Mostly solid credit history
  You’re in a good place. Some minor issues may exist, but you’re still seen as a responsible borrower.
• Fair (620 – 679) – In decent shape
  Your credit is okay, and you may qualify for many loan programs, including FHA and some conventional options.
• Needs Improvement (580 – 619) – Rebuilding and motivated
  You’re working to bounce back. FHA loans may be an option, and there’s room to grow with a little effort.
• Working on it (Below 580) – Starting fresh or recovering
  You might not qualify just yet, but the journey starts here. Credit repair or a focused savings plan can help you get ready. VA loans may allow for buyers under 580, depending on the lender and full application review.

➤ Improve Your Credit

If your score is not where you want it to be:

• Pay bills on time
• Pay down credit card balances
• Avoid opening new accounts
• Dispute any errors on your credit report

Improving your score even a little can save you thousands over the life of your loan.

2Gather Your Income, Asset, and ID Documents

Next, you will need to prove your income and finances. Lenders want to make sure you can repay the loan. To keep things moving smoothly, gather these documents in advance:

➤ Proof of Income

• Recent pay stubs (last 30 days)
• W-2s or 1099s (last 2 years)
• Tax returns (especially for self-employed buyers)

➤ Proof of Assets

• Bank statements (last 2 months)
• Retirement or investment account statements (if applicable)
• Gift letter if you are receiving help with the down payment

➤ Identification

• Government-issued ID (like a driver’s license)
• Social Security number
• Green card or visa (for non-U.S. citizens)

Having these ready makes it easier for the lender to move forward with your file.

3Understand FHA, VA, USDA, Conventional, and DPA Options

Not all loans are the same. Some work better for first-time buyers, while others are designed for specific groups like veterans or rural homebuyers. You do not need to know everything, but having a general understanding helps you ask smart questions.

➤ FHA Loans

• Designed for first-time buyers and those with low credit or small down payments
• Minimum credit score: Usually 580
• Down payment: As low as 3.5%

➤ VA Loans

• For eligible veterans, service members, and surviving spouses
• No down payment
• No monthly mortgage insurance
• Must meet service and eligibility requirements

➤ USDA Loans

• For homes in approved rural areas
• No down payment
• Income limits apply

➤ Conventional Loans

• Conventional loans follows guidelines set by these government-sponsored entities – FNMA (Fannie Mae) and Freddie Mac (FHLMC) – which buy and guarantee conventional loans to help keep mortgage rates stable and affordable.
• Often require higher credit scores and down payments
• Down payments can be as low as 3% for first-time buyers

➤ Down Payment Assistance (DPA) Programs

• Grants, forgivable loans, or deferred-payment loans that help with the down payment or closing costs
• Available in many states and cities
• Often paired with FHA or conventional loans
• Some DPA programs are specifically designed for first responders, healthcare workers, and teachers to help make homeownership more accessible to those who serve our communities

If you are not sure what loan is right for you, we can help explain your options. Knowing how to get pre-approved for a home loan includes matching your goals with the right program.

4Apply for Pre-Approval and Get Your Letter

Once your credit is in good shape and your documents are ready, it is time to apply.

➤ What Happens During the Application

You will fill out a loan application (often called a “1003”) online, over the phone, or in person. The lender will ask questions about your:

• Income and job history
• Monthly debts
• Savings and assets
• Credit history

They will then run your credit, review your paperwork, and calculate how much you may qualify to borrow.

➤ Get Your Pre-Approval Letter

If you are approved, you will receive a pre-approval letter. This letter shows:

• The loan amount you qualify for
• The loan type
• Your estimated interest rate

You can now house hunt with confidence. Sellers and real estate agents will take you more seriously because you are already approved to buy.

➤ What Do You Need to Get Pre-Approved for a Mortgage?

Let’s review the essentials:

• Good or improving credit score
• Proof of income and job history
• Savings or access to down payment funds
• Low monthly debts compared to your income
• A completed loan application

These are the basics every lender will review. You do not have to be perfect. You just have to be prepared. If anything needs work, we can guide you through the next steps.

Have questions? Want help applying for pre-approval?

Reach out to us today. We are here to guide you from where you are to where you want to be … home.