How Long Are Pre-Approved Mortgages Good For?

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Contributor, Benzinga
March 31, 2024

Jump straight to the answer: Pre-approved mortgages are usually good for up to 90 days.

In a competitive market, having mortgage preapproval can help you stand apart from other potential buyers. But how long are pre-approved mortgages good for? Usually up to 90 days, but you should check with your lender to confirm.

If you're dreaming about a home purchase, preapproval for a mortgage shows sellers you're serious about the purchase and can help strengthen your bid. Many realtors recommend getting preapproved before you start seriously shopping for a home.

Below, you'll get all the details of preapproval for a mortgage to prepare for this important step on your home-buying journey.

Understanding Preapproved Mortgages

A preapproved mortgage lets you understand exactly how much you can spend on a new home. This can save you time and money because you'll know exactly how much you can offer and to focus your search appropriately. 

Another major benefit is the competitive advantage when making an offer on a home. In a seller's market, a seller who receives multiple offers will choose a preapproved or cash buyer. Sellers feel more secure knowing there won't be any delays and the buyer can afford the home. Getting preapproval can also speed up the closing time so you can move in sooner.

How Long is a Preapproval Good For?

How long do preapprovals last? Mortgage preapproval duration varies by letter and individual offer terms. In most cases, a mortgage preapproval lasts between 60 and 90 days. 

You'll usually receive a preapproval or prequalification letter in the mail with the prequalification duration stated. It will also state the maximum you can receive and on what terms, including the interest rate. Although you're prequalified, this isn't a final mortgage approval.

How long does a prequalification letter last? The prequalification letter lasts for the stated duration, usually for 90 days or less. If you cannot find a home within the preapproval window, you should be able to renew your prequalification letter, assuming your financial circumstances remain similar to the initial preapproval. 

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How to Get a Preapproved Mortgage

If you're ready to proceed with preapproval for a mortgage, there are a few steps to take. 

The Preapproval Process

To get preapproval for a mortgage, you'll need to provide the mortgage lender with personal information, including employment history, credit score, income and debt. For a traditional mortgage, you'll need to show proof of income, including pay stubs or W-2s and income tax returns. For a nonqualified mortgage, you may be able to use bank statements as an alternative proof of income. 

During the preapproval process, the lender will review your finances. If approved, you'll be given a prequalification letter that shows the lender's willingness to give you mortgage financing based on their initial analysis of your income, assets, debt and creditworthiness. The letter will state the mortgage amount you've prequalified for and the duration of the approval. After the preapproval letter expiration, you'll need to renew the preapproval or reapply. 

Documents Required

Here's a complete list of documents you'll need to bring to get mortgage pre-approval:

  • Government-issued ID, such as a state-issued driver’s license or ID card, passport or U.S. alien registration card.
  • Social Security card, or at least your Social Security number
  • Pay stubs for proof of income
  • Bank statements for the past two to three months
  • Tax documents, including W-2s
  • Investment account statements, including 401(k), 403(b), individual retirement accounts (IRAs), stocks, bonds and mutual funds
  • All debts, including car payments, rent, credit card debt, student loans, home insurance and medical bills
  • Rental information
  • Landlord reference letter(s) stating that you've made rental payments in full and on time
  • Gift letters, if a loved one is gifting you money for part of the down payment

The lender will also pull your credit report. Applying for preapproval from multiple lenders within seven to 45 days should count as only one pull to your credit report, although the exact time span isn't clearly stated by the credit bureaus. To be safe, do all the mortgage preapproval applications within a couple of weeks to avoid impacting your credit score with multiple credit pulls. 

Factors Considered by Lenders

Lenders will look at your credit score, employment history and debt-to-income ratio to determine the loan amount. The debt-to-income ratio (DTI) is the ratio of your total monthly debt payments to your current income before taxes. The maximum debt-to-income ratio for mortgage approval is 43%. Lenders use DTI to determine the maximum loan approval amount.

For example, if a couple's combined monthly income is $10,000, the ratio of their monthly debt to $10,000 will be their DTI. If they have monthly payments of $300 for student loans, $500 for a car and no other debt, their maximum loan approval amount would be for monthly mortgage payments of $3,500. 

That's $3,500 mortgage payment + $300 student loan payment + $500 car payment

= $4,300 or 43% of income 

The maximum mortgage value will depend on the interest rate, loan duration and applicable fees or additional terms.

3 Tips for Maintaining Your Preapproval Status

If you aren't able to find a home and begin the home closing process within the first 60 to 90 days, you'll need to renew your mortgage preapproval. The following factors may affect your preapproval renewable and final mortgage amount. 

1. Financial Updates Required to Maintain Preapproval

Your lender may require you to report your financial status and earnings over the preapproval period. This can include pay stubs, bank statements or a W-2 form. The lender will use the income verification for final mortgage approval.  

2. Maintaining Employment Status

To maintain preapproval for a mortgage, you'll need to keep your job and income. If you lose your job, it may affect your preapproval status. If in doubt, discuss options with your lender.

3. Keeping Debt-to-Income Ratio in Check

Overspending during the preapproval period can result in losing your preapproval for a mortgage. For example, if you rack up credit card debt after preapproval, it can affect your final loan amount. 

Renewing Preapproved Mortgages

What if preapproval expires? You may need to renew a preapproved mortgage if you're not able to find a home in your budget that you want to buy. Likewise, if your income substantially increases, you may want to renew preapproval for a mortgage for a higher loan amount or lower interest rates. 

When lenders renew your preapproval, your financial information will be verified. For this, lenders will need the latest versions of all preapproval documents. See above for the complete list. 

How to Maximize Your Preapproved Mortgage

If you're ready to proceed with preapproval, checking with several lenders and optimizing your finances can help you get the best possible rate. Below are a few tips to get started.

1. Shop Around for the Best Mortgage Rates

Each mortgage lender can independently determine the maximum amount based on the same financial information you provide. For that reason, it's worth applying for preapproval from several lenders to get the best mortgage rates. By shopping around, you may qualify for a lower interest rate or be approved for a higher loan amount. 

2. Avoid Major Financial Changes During the Preapproval Period

To secure your preapproval for a mortgage, avoid significant financial changes within three months to a year before applying and during the preapproval process. Specifically:

  • Don't take on big loans.
  • Don't rack up credit card debt.
  • Don't miss loan payments or credit card payments.
  • Don't make large purchases like furniture until you get the mortgage.
  • Don't apply for new credit cards, loans or lines of credit.
  • Don't switch jobs.
  • Don't make large bank deposits without a paper trail. 

3. Knowing When to Lock in Your Rate

If you’re approved for a low-interest rate, you’ll want to act quickly to secure your mortgage at a favorable rate. The ideal time to act is when mortgage rates are low, but that can be difficult to determine. You can check historical interest rates for the past three years and talk to your real estate agent to understand the interest rate you may be able to get. You can also check the best 15-year mortgage rates or compare interest rates here.   

Securing Preapproval for a Mortgage

Whether purchasing your first home or planning for your dream home, getting preapproval for a mortgage can be the first step. If you're unsure what you can purchase, a mortgage preapproval will clarify what you can qualify for right now. You can always keep building up savings, improving credit or working to increase income to get a better offer. Remember that you only need one lender to approve the mortgage to get the home of your dreams. With careful financial planning, a mortgage preapproval could take you one step closer.

Frequently Asked Questions

Q

What happens if my preapproved mortgage expires?

A

If your preapproved mortgage expires before you’ve found a home to purchase, you’ll need to reapply for preapproval. This will typically involve submitting updated financial information, such as recent pay stubs and bank statements as well as other requested financial documents with valid ID.

Q

Can I extend my preapproved mortgage?

A

In some cases, lenders may allow you to extend the validity of your preapproval. But this is not always guaranteed. You should confirm with your lender whether an extension is possible and what the requirements are for your situation.

Q

Can I still be denied a mortgage after obtaining a preapproval?

A

Yes, it’s possible to be denied a mortgage even after being preapproved. Preapproval is based on preliminary information and does not guarantee final approval. Lenders will still need to review your full application and conduct a home appraisal before making a final decision on your mortgage.

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About Alison Plaut

Alison Plaut is a personal finance and investing writer with a sustainable MBA, passionate about helping people learn more about wealth building and responsible debt for financial freedom. She has more than 17 years of writing experience, focused on real estate and mortgages, business, personal finance, and investing. Her work has been published in The Motley Fool, MoneyLion, and she regularly contributes to Benzinga.