In today's competitive housing market, stepping into house hunting without a pre-approval letter is like showing up to a car dealership without knowing if your credit is good enough. Sellers won't take you seriously, and you may fall in love with a home you can't actually buy.
Pre-Qualification vs. Pre-Approval
| Feature | Pre-Qualification | Pre-Approval |
|---|---|---|
| Credit check | Soft pull (no impact) | Hard pull (small impact) |
| Document review | None — self-reported | Full income and asset verification |
| Strength | Informational estimate | Conditional lender commitment |
| Accepted by sellers | Rarely | Standard expectation |
| Validity | Not formally valid | 60–90 days |
Documents You'll Need
- Two years of W-2s and federal tax returns
- One month of recent pay stubs
- Two months of bank statements (all pages)
- Investment and retirement account statements
- Photo ID (driver's license or passport)
- Social Security number
- If self-employed: two years of business tax returns + year-to-date P&L statement
- If rental income: signed lease agreements and Schedule E from tax returns
How Pre-Approval Affects Your Credit Score
A hard credit inquiry typically lowers your score by 5 points or less — and only temporarily. More importantly, if you apply with multiple lenders within a 14–45 day window, FICO treats all mortgage inquiries as a single inquiry. So shop around! Comparing 3–5 lenders can save you tens of thousands over the life of the loan.
Getting the Most From Your Pre-Approval
- Get pre-approved before starting serious house hunting.
- Apply with at least 2–3 lenders to compare rates and fees.
- Ask for a letter at a lower amount than your max — this prevents sellers from pricing accordingly.
- Renew your letter if it expires before you find a home.
- Avoid major financial changes after pre-approval: no new credit cards, car loans, or large cash deposits.
Pre-approval is conditional — the lender still needs to approve the property and may request additional documents. 'Clear to Close' (CTC) is when all conditions are satisfied and the loan is ready to fund.