Securing a mortgage preapproval is a crucial step in the homebuying process. It not only strengthens your offer but also helps you understand how much you can borrow. However, lenders have specific requirements before granting preapproval. Here’s what you need to prepare.

1. Strong Credit Score

Lenders evaluate your creditworthiness based on your credit score. Most require a minimum score of 620 for conventional loans, while FHA loans may accept scores as low as 580. A higher score improves your chances of approval and better interest rates.

2. Proof of Income and Employment

Lenders need assurance that you can repay the loan. You’ll typically need:

• Recent pay stubs (last 30 days)
• W-2 or 1099 forms from the past two years
• Tax returns (if self-employed)
• Verification of employment (VOE) from your employer

3. Debt-to-Income Ratio (DTI)

Your DTI compares your monthly debt payments to your gross income. Most lenders prefer a DTI below 43%, though some may allow up to 50% with strong compensating factors.

4. Down Payment Documentation

While preapproval doesn’t require an actual down payment, you must show you have the funds available. Provide:

• Bank statements (last 2-3 months)
• Gift letters (if receiving funds from family)
• Investment or retirement account statements (if applicable)

5. Valid Identification

You’ll need a government-issued ID (driver’s license, passport) to verify your identity and legal residency status.

6. Property Details (Optional)

While not always required, some lenders may ask for an estimated purchase price or property type to tailor your preapproval amount.

Final Thoughts

Mortgage preapproval streamlines your homebuying journey, but preparation is key. By gathering the necessary documents and improving your financial profile, you’ll position yourself as a strong borrower. Consult with multiple lenders to compare offers and secure the best terms.