By Bill Lyons | Published on August 11, 2023
TABLE OF CONTENTS

    A mortgage pre-approval is one of the first steps you should take after making the decision to buy a home. Obtaining a mortgage pre-approval letter gives you negotiating power when shopping for homes and shows sellers you’re a serious buyer.

    Unfortunately, your mortgage pre-approval letter won’t last forever. So how long is a pre-approval good for? Most pre-approvals expire after 60-90 days, so if you’re still looking for a home after that period, you’ll need to apply all over again.

    Keep reading to learn more about mortgage pre-approvals.

    KEY TAKEAWAYS

    • Mortgage pre-approvals show sellers you’re a serious buyer, giving you more leverage when making an offer on a home.
    • A pre-approval typically lasts 60-90 days.
    • If your pre-approval expires, you’ll need to apply for another letter with your current financial information.

    What Is a Mortgage Pre-Approval?

    A mortgage pre-approval is the process in which a lender evaluates a borrower’s financial information to determine if they’re eligible for a loan and the loan amount. The pre-approval letter helps you understand your budget and provides sellers with a certain level of reassurance that you’re capable of securing financing.

    In addition to a proof of funds letter, sellers prefer to accept offers from potential buyers who have gone through the pre-approval process because it shows them the offer is serious and demonstrates the likelihood of them being accepted for a certain loan amount.

    A mortgage pre-approval does not guarantee that your final loan application will be approved for the same loan amount. Once you make an offer on a home and apply for a mortgage loan, your financial information and information about the property will go through the mortgage underwriting process to verify all the necessary information to determine whether you qualify for a particular loan, your interest rate, and loan amount.

    With a simple 10-step mortgage process, Griffin Funding strives to make applying and securing a home loan easy, transparent, and quick.

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    It’s important to note that a pre-approval is not the same as a mortgage pre-qualification. Learn about the differences between pre-qualification vs. pre-approval before shopping for a home.

    What Determines Your Pre-Approval Amount?

    To get pre-approved for a home loan, you’ll need to submit an application and provide the lender with the necessary documents to help them determine whether you qualify for a loan and how much you might qualify for based on credit score, interest rates, debt-to-income (DTI) ratio, and other factors.

    Documents you need for pre-approval typically include W-2s, bank statements, pay stubs, and tax returns.

    Once the lender has that information, they can assess your creditworthiness and ability to repay the loan based on the following:

    • Income: Your income is verified using pay stubs, W-2s, tax returns, bank statements, and other methods, depending on the loan you apply for. The lender may also contact your employer to verify your employment status.
    • Debt-to-income (DTI): The DTI ratio compares your monthly debt obligations to your gross monthly income. Lenders like to see a DTI ratio below 43%, although certain programs, such as VA loans, may have more lenient requirements.
    • Credit history and credit score: Your credit score is based on your payment history, outstanding debts, length of credit history, and credit utilization. With your credit history, lenders like to see you’re someone who pays their debts on time. The higher your credit score, the better your interest rate, and having a low credit score may not allow you to qualify for a loan.
    • Assets: Proof of assets can help you demonstrate financial stability with savings, investments, and other liquid assets.
    • Loan type and terms: Each loan is unique. The type you apply for, such as conventional, FHA, VA, or non-QM loan, can impact your pre-approval amount. Loan terms can also play a role in determining how much you may be able to borrow.

    What Is a Mortgage Pre-Approval Letter?

    A mortgage pre-approval letter verifies that you’ve been pre-approved for a mortgage and a specific amount. A mortgage pre-approval letter doesn’t mean that you’re guaranteed to be approved for the final loan, but it can give you a general idea of your budget.

    The letter shows sellers that you’re financially capable of purchasing a house, giving you more negotiating power when you make an offer.

    Since the purpose of a mortgage pre-approval is to determine eligibility for the loan and tell you how much you might be approved for when you apply for the final loan, it only consists of a few basic pieces of information, such as:

    • Borrower info
    • Loan amount
    • Loan type
    • Conditions or contingencies
    • Pre-approval expiration

    How Long Do Pre-Approvals Last?

    So how long is a mortgage pre-approval letter good for? Unfortunately, your pre-approval letter will expire after 60-90 days, depending on the lender.

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    Why Do Pre-Approvals Expire?

    Pre-approvals expire because they’re based on a snapshot of your financial situation at the time of evaluation. As you know, financial situations change regularly. By setting an expiration date, lenders ensure the pre-approval reflects your current financial position at the time you apply.

    When your mortgage pre-approval expires, lenders will need to reassess your financial information and compare it to current market conditions to redetermine your interest rate and loan amount.

    When Should You Apply for Pre-Approval?

    You should apply for pre-approval before you start house hunting or making offers because it can help you stay within your budget. Many real estate agents and sellers prefer working with pre-approved buyers because it demonstrates their seriousness and financial readiness.

    Mortgage pre-approval can also help you start building a relationship with a lender and give you time to gather all the documents you need for final loan approval. In addition, you can lock in your rate when interest rates are low to save money later.

    How Long Does the Pre-Approval Process Take?

    The pre-approval process can take anywhere from two-to-four weeks, but it ultimately depends on the lender. Some lenders like Griffin Funding can provide you with basic pre-approval in as little as 24 hours.

    Apply for Pre-Approval with Griffin Funding

    Mortgage pre-approval can show sellers you’re a serious buyer while helping you stay within budget when house hunting. It’s important to note that pre-approval and final approval are not the same because your financial situation will need to be reassessed when you apply for the loan. In addition, pre-approval doesn’t consider the property, which will need to be appraised to determine its market value before you can access your financing.

    Get pre-approved in as little as 24 hours when you apply with Griffin Funding. We know how quickly the market can change. A faster pre-approval can help you become more appealing to sellers when it’s ready to make an offer on your dream home. Apply online or contact us today.

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    Frequently Asked Questions

    Does a pre-approval hurt my credit score?

    To give you pre-approval on a home loan, lenders must perform a credit check, which can result in a hard or soft inquiry. Hard inquiries can affect your credit score, while soft inquiries don't. Some lenders perform soft credit checks while others perform hard inquiries, so whether pre-approval hurts your credit score will depend on your lender.

    Many borrowers request pre-approval from multiple lenders to compare loan amounts and interest rates. If you're going to do this, you should do it within a 45-day window to have as minimal impact on your score as possible.

    If your score decreases from a hard inquiry, it's temporary. Paying your debts on time will bring your score back up quickly.

    What happens if my pre-approval expires before I find a home?

    How long is a pre-approval letter good for? Typically, your pre-approval letter will expire after 60 - 90 days. If your pre-approval expires before you find a home, you can have it renewed by re-verifying your financial information. Unfortunately, lenders typically won't extend your pre-approval because they want to see the latest information about your unique financial situation, which is why they expire in the first place.

    For instance, let's say a borrower's pre-approval letter expires. During the time the borrower was looking for a house, they lost their job and couldn’t find a new one. A lender won't know this information until the borrower goes through the pre-approval process again. If the lender had extended the pre-approval, the borrower might have made an offer on a home only to find out when it came time for final approval that they no longer qualify for the home loan.

    It's important to ask your lender, "How long is a home loan pre-approval good for?" and check the expiration date on your pre-approval letter because the time frames vary by lender. One lender might have a 60-day pre-approval expiration date, while another offers 90 days.

    Can the validity period of a pre-approval be extended?

    There are some occasions when a lender might extend your mortgage pre-approval. For example, a lender may not require re-verification if your request falls within a reasonable timeframe and is supported by a valid reason.

    In most cases, however, lenders won't extend your pre-approval because they need your current information to determine loan eligibility, interest rate, and loan amounts.
    Bill Lyons

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.