Mortgage Pre-Approval

A mortgage pre-approval is a formal process in which a lender reviews your full financial profile — credit report, income documentation, employment, and assets — and issues a conditional commitment to lend up to a specified amount. Unlike pre-qualification, pre-approval involves a hard credit inquiry and requires documented evidence of income (W-2s, tax returns, pay stubs) and assets (bank statements). A pre-approval letter signals to sellers that you are a serious, verified buyer. In Canada, a pre-approval from a major bank or mortgage broker also typically includes a rate hold for 90–120 days. CFPB: pre-qualification vs pre-approval.

Pre-qualification is an informal estimate based on self-reported income and debt — no documentation required, no credit pull, or only a soft pull. It takes minutes and has no binding force. Pre-approval is a documented, underwritten commitment: (1) Hard credit inquiry (1–5 point temporary score dip); (2) Verified income — you submit W-2s, pay stubs, and tax returns; (3) Verified assets — bank statements showing down payment and reserves; (4) Employment verification. The result is a conditional commitment to lend up to a specific amount, subject to appraisal and final property underwriting. Most real estate agents and sellers in competitive markets require a pre-approval letter (not just pre-qualification) before accepting an offer. Comparison at CFPB's preparing to buy a home guide.

Pre-approval validity periods: US: most lenders issue pre-approvals valid for 60–90 days; some extend to 120 days. After expiration, a new credit pull and updated income/asset documentation are required. Canada: pre-approvals from chartered banks and brokers are typically valid for 90–120 days and include a rate hold at the pre-approved rate. If you find a property within the rate hold period, you lock in that rate. If you find a home after expiry, you re-apply at the current rate. If your financial situation changes (job change, large purchase, new debt) during the pre-approval period, notify your lender immediately — the pre-approval may be invalidated even before expiry. Details from CMHC's pre-approval guide (Canada).

No — a pre-approval is conditional, not a guarantee. Common conditions that must still be satisfied: (1) Satisfactory appraisal — the property must appraise at or above the purchase price; (2) Clear title — title search must show no liens or encumbrances; (3) No material change in financial profile — job loss, new debt, or large cash withdrawal between pre-approval and closing can trigger a re-underwriting failure; (4) Property eligibility — the specific property must meet the lender's guidelines (e.g., a non-warrantable condo would fail on a pre-approval for a conventional loan). The pre-approval is a commitment to you — the final approval at underwriting is a commitment on the specific transaction. See the pre-approval vs pre-qualification guide for a detailed breakdown.

A pre-approval requires a hard credit inquiry, which typically lowers your FICO score by 1–5 points temporarily. However, the credit scoring models (FICO and VantageScore) treat multiple mortgage inquiries within a short window (14–45 days depending on model version) as a single inquiry — so shopping multiple lenders within that window has the same credit impact as a single application. Strategy: complete all lender applications within a 14-day window to minimize credit impact. The score impact disappears after 12 months and the inquiry falls off your report after 2 years. Avoid applying for other credit (car loans, credit cards) while you're in the mortgage process. The CFPB guide on credit inquiries during mortgage shopping explains the rate-shopping window.

Standard documents required for pre-approval: (1) Income: 2 years W-2s (US) or T4s/NOAs (Canada); most recent 30 days pay stubs; if self-employed: 2 years personal and business tax returns; (2) Assets: 2–3 months bank statements for all accounts; investment account statements; gift letter if using gifted funds; (3) Employment: employer name, address, phone (for verification); (4) Credit: lender pulls directly — you don't provide; (5) Property: not needed for pre-approval (required at full application for a specific property); (6) ID: government photo ID. Self-employed borrowers need additional documentation — see the self-employed mortgage rules guide for the full list.