By the Wirly Editorial Team | AI-assisted, human-reviewed
A mortgage pre-approval is a conditional commitment from a lender stating how much they are willing to lend you, based on a review of your income, assets, credit, and debts. It is more thorough than a pre-qualification.
During pre-approval, the lender pulls your credit report, verifies your income and employment, and reviews your assets and debts. Based on this review, they issue a pre-approval letter stating the maximum loan amount you qualify for, the estimated rate, and any conditions that must be met before final approval.
Pre-approval is different from pre-qualification. Pre-qualification is typically a quick, informal estimate based on self-reported information. Pre-approval involves actual documentation and a hard credit inquiry, making it a stronger signal to sellers and real estate agents that you are a serious, qualified buyer.
For refinancing, pre-approval helps you understand your budget and rate before committing to the process. A pre-approval letter is usually valid for 60 to 90 days. Keep in mind that pre-approval is not a guarantee of final approval. The lender will still need to verify the property value through an appraisal and may request additional documentation during underwriting.
A credit score is a three-digit number (typically 300 to 850) that represents your creditworthiness. Lenders use it to determine your mortgage eligibility and the interest rate you qualify for.
DTI (Debt-to-Income Ratio)Your debt-to-income ratio is the percentage of your gross monthly income that goes toward debt payments. Lenders use DTI to assess whether you can afford a new mortgage or refinance.
UnderwritingUnderwriting is the process a lender uses to evaluate your financial profile and the property to determine whether to approve your mortgage application and at what terms.
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