Should You Get Mortgage Preapproval Before You Start Looking for a Home?

Lauren Wellbank
Written by Lauren Wellbank
Updated June 13, 2022
Realtor giving keys to new property owners
Photo: Jacob Lund / Adobe Stock


  • Your mortgage preapproval will let you know exactly how much home you can afford.

  • The letter from your lender will list everything from your estimated payment to your interest rate.

  • Preapproval letters are only valid for a maximum of 90 days. 

  • You need to have a preapproval when submitting an offer letter for a home.

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Whether you’re planning to buy your first home, vacation home, or an investment property, it’s important to get a mortgage preapproval before touring homes to ease the home-buying process. While it’s one of the preliminary steps hopeful homeowners should take before they begin looking for their dream home, it by no means guarantees a loan approval. Here’s what you need to know about getting a mortgage preapproval.

What is a Mortgage Preapproval?

A couple checking documents
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A mortgage preapproval is a document from a loan lender that assesses your income, debt, and creditworthiness to determine how much house you can afford. Your preapproval is a letter that a lender will give you after they’ve reviewed personal documentation like your income, assets, and current financial obligations. 

Keep in mind that a preapproval letter is a promise from a lender, but not a guarantee. Your lender will run another financial check once you’ve ready to close on a house to ensure you still qualify for a home loan. If you need help finding a lender, contact a local real estate agent for recommendations.

What’s Included in a Mortgage Preapproval?

Let’s review what you can expect to see in your mortgage preapproval letter.

Purchase Price

The purchase price provided by your lender is the amount your lender thinks you can afford to spend on a potential new home. While you don’t have to spend the full amount, it’s important to know you won’t be able to secure an approval for a loan higher than that figure. 

Loan Amount

This number provides a clear picture of your maximum home loan amount. Your loan amount will be less than your purchase price because the figure will exclude your down payment and closing costs. 

Loan Type or Program

Your lender will specify which type of loan you’ve qualified for. While there are several types of home loans, your mortgage preapproval will specify which type you can use.

Qualified Interest Rate

Your mortgage preapproval letter will detail the interest rate that the lender is willing to charge you. Keep in mind that you can’t lock in the interest rate until you find and secure a property.

Expiration Date

Unfortunately preapprovals expire after a set time period. Most preapprovals are only valid for up to 90 days after an underwriting review. Things move quickly in the housing market—rates fluctuate, fees change, and policies have to adapt to a changing landscape.

Why Do You Need a Mortgage Preapproval?

Now that you know everything that goes into a preapproval, it may be easier to understand why you need one before getting serious about house hunting. A mortgage preapproval will allow you to shop for a home with complete knowledge of what you can and cannot afford to buy. This type of verified documentation takes some of the guesswork out of home shopping.

Most importantly, having a mortgage preapproval will prove to home sellers that you’re prepared to buy a home and that you’re capable of closing the deal. When housing demand is high, it’s valuable to be able to show sellers that you have a financial plan in place. Plus, it may help you stand out from the pack of other motivated buyers, especially during a bidding war.

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