6 Things to Have for Mortgage Pre-Approval

Alicia Purdy

Most home buyers are able to make a purchase by taking out a mortgage on the house they want through a lender such as a bank. The process involves a number of steps from deciding on the amount of the loan to cleaning up personal credit history, depending on the situation. The mortgage pre-approval process is the part of securing a loan that will allow borrowers to legally purchase and start payment for the house. When a borrower has completed the mortgage pre-qualification process, the lender they choose will send a letter that discusses the terms of a potential loan amount based on financial history.

Credit History

Getting pre-approved for a mortgage means that your financial and credit histories will be examined closely. Lenders will look at how consistent you have been with payments on rentals, credit cards, car loans and other types of financial obligations. Come prepared with tax statements, pay stubs and credit history reports.


If you already own a house, you will need to present the name of your current lender. If you are a renter, be prepared to give the name and contact information of your landlord. Lenders will want to reach out to them and discuss your ability to consistently make payments.

Tax Documents

Those who are self-employed will need to turn in tax documents for any business they own where income was made for the previous two years. Additionally, they will need to give lenders a profit and loss statement as well as a current balance sheet to show how the business is doing currently.

Other Assets

If you are the holder of assets like stocks or bonds, alternative investments such as real estate, or retirement accounts such as an IRA or 401k, you will need to provide your most recent statements for the previous months. These are considered part of your personal wealth total and will be taken into consideration for pre-approval.

Debt-to-Income Ratio

In order to obtain a mortgage pre-approval, your debt-to-income ratio should be low. This means that you should be making more income than you have debt to repay. Lenders will look at how much debt you hold as part of the decision for pre-approval. If the ratio is very high, lenders may deny your request or require other things like high interest rates.

Down Payment

Having a large sum of cash to put down on the house will decrease the amount of the loan you will need to purchase a house. This will increase the likelihood that you’ll be pre-approved for a loan. Having cash for a down payment on the house shows lenders that you have worked to save up money and are probably making enough to be consistent with repayment. Because of that you won’t need to borrow as much, which lenders like to see.

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