Be prepared to provide details about your employment, income, debt and financial accounts to get preapproved for a mortgage.
Hal M. Bundrick, CFP®
Senior Writer | Personal finance, financial planning, investing
Hal M. Bundrick is a former NerdWallet personal finance writer. He is a certified financial planner and former financial consultant and senior investment specialist for Wall Street firms. Hal advised families, business owners, nonprofits and trusts, and managed group employee retirement plans.
Reviewed by Michelle Blackford Michelle Blackford
Michelle Blackford spent 30 years working in the mortgage and banking industries, starting her career as a part-time bank teller and working her way up to becoming a mortgage loan processor and underwriter. She has worked with conventional and government-backed mortgages. Michelle currently works in quality assurance for Innovation Refunds, a company that provides tax assistance to small businesses.
At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work.
Assigning Editor Johanna Arnone
Assigning Editor | Mortgage lenders, homebuying, home equity
Johanna Arnone helps lead coverage of homeownership and mortgages at NerdWallet. She has more than 15 years' experience in editorial roles, including six years at the helm of Muse, an award-winning science and tech magazine for young readers. She holds a Bachelor of Arts in English literature from Canada's McGill University and a Master of Fine Arts in writing for children and young adults. Practice making complicated stories easier to understand comes in handy every day as she works to simplify the dizzying steps of buying or selling a home and managing a mortgage. Johanna has also completed coursework in Boston University’s Financial Planning Certificate program. She is based in New Hampshire.
Fact Checked Co-written by Taylor Getler Taylor Getler
Writer | Home equity, first-time home buying, home warranties
Taylor Getler is a home and mortgages writer for NerdWallet. Her work has been featured in outlets such as MarketWatch, Yahoo Finance, MSN and Nasdaq. Taylor is enthusiastic about financial literacy and helping consumers make smart, informed choices with their money.
Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.
Scrolling through glossy online listings might fuel your dream-home fantasies, but the homebuying process begins in earnest when you contact a lender and get preapproved for a mortgage. Although it’s nonbinding, mortgage preapproval reveals how much a lender is willing to let you borrow and what kind of mortgage you may be eligible to receive. Once this process is complete, the lender will provide you with a preapproval letter.
You can get similar information regarding your estimated borrowing limit by going through pre-qualification, which is an informal process involving self-reported financial data.
Preapproval, on the other hand, is substantiated by financial documentation, which is why a preapproval letter from a lender is meaningful. Pre-qualification can be a helpful way to establish a realistic budget, while a preapproval letter lets real estate agents and home sellers know that you’re able to obtain financing and are ready to buy a home.
Once you’ve tracked down all the necessary information, you’re ready to start researching lenders that may be a good fit. Many of them have a preapproval portal on their websites.
You’ll need to gather documentation to get preapproved, including Social Security numbers, proof of income, banking information and tax forms. (Use a preapproval documentation checklist .)
You’ll want to get your financial ducks in a row before applying. This can include disputing incorrect data on your credit report or paying off some existing debts to signal to lenders that you can afford a mortgage.
Pre-qualification is a more casual and informal way to gauge your readiness to buy a home, while preapproval is a more involved process that is best suited to borrowers who are ready and motivated to buy.
Your preapproval will likely expire in three months or less.Get your free credit score . It’s helpful to know where you stand before reaching out to a lender. A credit score of at least 620 is recommended to qualify for a mortgage, and a higher one will qualify you for better rates. Generally, a credit score of 740 or above will enable you to qualify for the best mortgage rates. You’ll want to get your score as high as possible before embarking on the homebuying journey, but you can also focus on lenders that specialize in working with borrowers with low scores if needed.
Check your credit history. Request copies of your credit reports, and dispute any errors . If you find delinquent accounts, work with creditors to resolve the issues before applying.
Calculate your debt-to-income ratio. Your debt-to-income ratio, or DTI, is the percentage of gross monthly income that goes toward debt payments, including credit cards, student loans and car loans. NerdWallet’s debt-to-income ratio calculator can help you estimate your DTI based on current debts and a prospective mortgage. Lenders prefer borrowers with a DTI of 36% or below, including the prospective mortgage payment, though it can be higher in some cases. If your monthly debts are prohibitively high, you may need to address this by refinancing, getting on an income-based repayment plan or paying down your debt more aggressively before you take on a mortgage.
Gather income, financial account and personal information. That includes Social Security numbers, current addresses and employment details for you and your co-borrower if you have one. You’ll also need bank and investment account information and proof of income. Documents you’ll need to get a mortgage preapproval letter include your W-2 tax form and 1099s if you have additional income sources and pay stubs. Lenders prefer two years of continuous employment, but there are exceptions. Self-employed applicants will likely have to provide two years of income tax returns. If your down payment will be coming from a gift or the sale of an asset, you’ll need a paper trail to prove it.
Contact more than one lender. Comparing offers from multiple lenders can help you compare rates and fees, and save you thousands of dollars over a 30-year mortgage. Because preapproval involves a hard inquiry, your credit score may experience a slight (but temporary) hit. However, because all of your applications pertain to one loan, you’ll get dinged only one time, rather than getting penalized for every lender that grants you preapproval. According to the Consumer Financial Protection Bureau (CFPB), your preapproval applications will count as only one inquiry if they are all submitted within a 45-day window.
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