Mortgage Preapproval Checklist: What to Gather Before You Apply
A mortgage preapproval checklist is the short list of documents and decisions you want ready before you ask a lender to put a number in writing. Get it together first and preapproval takes a day or two. Skip it and you spend a week trading emails while the house you liked goes under contract to someone else.
This post started as a 2019 tip about selecting a mortgage lender. Comparing lenders now has its own post, mortgage broker vs bank, so this one covers the step right after: what to bring once you have picked who you want to work with.
The mortgage preapproval checklist: documents
Lenders vary, and the Consumer Financial Protection Bureau says as much on its page about how to get a preapproval letter: different lenders ask for different levels of documentation, so ask yours what it needs. In practice, most lenders want some version of this list:
- ID. A driver’s license or passport for every borrower on the loan.
- Income. Your most recent pay stubs, usually covering 30 days, and W-2s for the last two years.
- Tax returns. Two years of federal returns if you are self-employed, earn commission, or have rental income. Some lenders want them from everyone.
- Bank and investment statements. The last two months, every page, for every account you plan to use for the down payment or closing costs.
- Debts. Car loans, student loans and credit cards will show on your credit report, but have the statements handy in case something looks off.
- Anything unusual. A gift letter if family is helping, a divorce decree if you pay or receive support, a letter explaining a gap in employment.
Self-employed buyers have a longer list. Our post on the self-employed mortgage covers what Texas lenders ask for and why.
Decisions to make before you apply
Paperwork is half of the mortgage preapproval checklist. The other half is three decisions that change the number on the letter.
Your loan type. FHA, conventional, VA and USDA loans have different down payment, credit and mortgage insurance rules. If you are not sure which fits, read FHA vs conventional loan first.
Your down payment. Decide what you will put down and what you will keep in reserve. A preapproval built on spending every dollar you have is a preapproval for a stressful first year.
Your real monthly budget. A lender tells you what you qualify for, not what you are comfortable paying. In Fort Bend County, property taxes, MUD taxes and HOA dues can add hundreds a month to the same purchase price. Pick your ceiling before the lender picks it for you.
What the lender checks
Expect a credit check. The CFPB notes that lenders typically pull credit before issuing a preapproval letter. If you are worried about shopping more than one lender, the CFPB also explains that multiple mortgage credit checks within a 45-day window are recorded as a single inquiry. So compare two or three lenders in the same couple of weeks rather than spreading it out over months.
The lender will also look at your debt-to-income ratio, how long you have been in your job, and where your down payment came from. Large deposits that are not payroll will need an explanation, which is why you should not move money around right before you apply.
How long a preapproval lasts
Letters usually expire after 30 to 60 days, according to the CFPB. If your search runs longer, your lender will ask for updated pay stubs and bank statements and may pull credit again. That is normal. Keep your mortgage preapproval checklist folder current so the refresh takes an hour, not a week.
A preapproval is also not a loan commitment. It is based on what you told the lender and what it has verified so far. The full review happens in underwriting, after you are under contract. Our post on the mortgage underwriting process covers what happens there.
Mortgage preapproval checklist mistakes to avoid
- Opening a new credit card or financing furniture after you apply.
- Changing jobs, or switching from salary to commission, without telling your lender.
- Depositing cash you cannot document.
- Getting a letter for the maximum and shopping at the maximum.
Once you have the letter, the next step is understanding what it says, and whether a seller will treat it as a real preapproval or a prequalification. We cover that difference in mortgage prequalified vs preapproved. The full sequence is in our home buying checklist for Texas buyers.
Written by Stacy Burgin, a real estate agent with Terra Point Realty serving Fulshear, Katy and the greater Houston area, with 300+ transactions and 130+ home sales closed. If you want a second set of eyes on your numbers before you apply, call (713) 766-1697.