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Mortgage Pre-Approval
Definition
A lender's conditional commitment to lend a specific amount for a home purchase.
Explanation
Pre-approval involves a hard credit check and document review (pay stubs, tax returns, bank statements). It tells you the maximum loan you qualify for and shows sellers you're serious. Valid for 60-90 days.
Pre-approval differs from pre-qualification (informal, not verified). Sellers typically require a pre-approval letter before accepting offers.
Example
You submit documents to a lender and get pre-approved for a $375,000 mortgage. Now you can shop for homes up to that price with confidence.