🏡 Home Loan Pre-Approval Made Simple: A Step-by-Step Guide for Home Buyers

kpacker1
Sep 28
4 min read

Updated: Oct 13

Buying a Home: The Essential Guide to Mortgage Pre-Approval

Buying a home is an exciting journey. However, before you start touring properties, there’s one crucial step you cannot skip: getting pre-approved for a home loan. Getting your mortgage pre-approval is the very first step in the home buying process. It helps you understand how much you can afford and shows sellers you’re a serious buyer.

In this guide, I’ll break down the pre-approval process in a way that is easy to understand. I’ll cover the steps involved and the standard documents needed.

✅ What Is Home Loan Pre-Approval?

Pre-approval is when a lender reviews your financial information. They provide a letter stating how much money you’re likely to be approved to borrow for your home purchase. It’s not a guarantee, but it’s a strong indicator of your buying power.

📋 Step-by-Step Pre-Approval Process (with Documents)

Step 1: Gather Your Financial Documents

Lenders prefer borrowers who are organized and ready. When you have all your documents in order, it shows the lender that you are committed and financially responsible. This organization helps the lender assess your financial situation quickly. It allows them to issue a pre-approval letter faster or provide next steps to complete before you can be pre-approved.

Before applying, you will need to collect these documents:

Pay stubs (last 30 days)
W-2s or 1099s (last 2 years)
Tax returns (last 2 years)
Bank statements (last 2–3 months)
Government-issued ID
Social Security number
Proof of additional income (bonuses, child support, etc.)

Step 2: Choose a Lender

Choosing the right lender is one of the most important steps in the home buying process. It directly affects your financial future and overall experience. Different lenders offer various interest rates, loan types, and levels of customer service. The lender is a key component in whether your deal is accepted by a seller.

Lender Options:

Banks
Credit unions
Mortgage brokers
Online lenders

📌 Tips:

✅ Check with your agent (Me 🙂) for a trusted lender. I can connect you with professionals I trust who offer great service and competitive rates.
Shop around to compare interest rates, fees, and customer service.

Step 3: Fill Out a Pre-Approval Application

Filling out the pre-approval application is your formal request to the lender. This allows them to evaluate your financial situation and determine how much you can borrow for a mortgage. You may or may not have spoken to the actual lender yet. Once they have the application, they will look more in-depth at your finances and verify all your information.

You’ll provide:

Personal info (name, address, Social Security Number)
Employment details
Income and assets
Monthly debts

📄 Documents needed:

Everything from Step 1
See each loan type below for specific documents

Step 4: Credit Check

The lender will run a hard credit inquiry to check your credit score and history. This does affect your credit score, but usually only by a few points. This helps the lender evaluate your creditworthiness. They will see your credit score, payment history, outstanding debts, credit utilization, types of credit accounts, and any recent credit inquiries.

📄 Documents needed:

Just your Social Security number and signed consent

📌 Tip: To keep your credit score healthy and avoid issues during the mortgage process, avoid doing the following until after you have closed on your new home:

Apply for new credit
Make a large purchase using credit
Miss monthly payments
Close old accounts
Co-sign loans

Step 5: Lender Review

This is when the lender has the full picture of your financial profile. They carefully evaluate your profile and decide whether you're a good candidate for a loan, how much you can borrow, and what type(s) of loan you qualify for.

The lender evaluates:

Debt-to-income ratio (DTI)
Loan-to-value ratio (LTV)
Employment stability

📄 They may request:

Verification of employment
Gift letter (if someone is helping with your down payment)
Rental history (if you don’t have a mortgage)

Step 6: Receive Your Pre-Approval Letter

Receiving a pre-approval letter is a significant milestone in the home buying process! When you have the letter, you have completed step 1 of your journey. It means that the lender has completely reviewed your financial information and is willing to lend you a specific amount for a mortgage, pending final approval.

If approved, you’ll get a letter stating:

Maximum loan amount
Loan type (e.g., FHA, VA, Conventional)
Estimated interest rate
Expiration date (usually 60–90 days)

📄 Keep this letter handy—you’ll need it when making offers.

📌 Tip: Send this letter to your real estate agent as soon as you get it. This will be needed for any offers submitted on your behalf.

💡 Final Tips

Organize your documents to speed up the process.
Check your credit score and fix any issues. Good lenders can help with this if needed.
Apply early—the pre-approval must be done before house hunting begins.
When applying for pre-approval, tell your lender what loan type you're interested in. They’ll tailor the process and document requests accordingly.
Send your pre-approval letter to your real estate agent. This letter must be submitted with your offer on any property.

Understanding the Importance of Pre-Approval

Getting pre-approved is more than just paperwork—it’s your ticket to shopping with confidence. It allows you to make offers that stand out. By understanding the process and preparing your documents ahead of time, you’ll be well on your way to buying the home you’ve been dreaming of.

You don’t have to navigate it alone! Contact me today, and we will chat about your specific situation. I will give you options for a trusted lender and guide you every step of the way. Let’s make your home buying journey smooth and enjoyable!