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Mortgage Basics

How Long Does a Mortgage Preapproval Letter Last?

When a lender issues a mortgage preapproval letter, the document indicates it is valid for a limited period of time. Most lenders issue 90-day preapprovals, but each lender sets its own time limit, and letters with 60-day and 30-day limits are issued as well.

A mortgage preapproval indicates how much money you are authorized to borrow to buy a house. It usually specifies the type of loan you qualify for and the interest rate the lender would charge you upon completion of a full mortgage application.

A mortgage preapproval letter attests to your ability to follow through on a purchase offer on a home you wish to buy. It can provide a significant advantage in competitive housing markets: When a seller is considering several similar offers for a home, a bidder with preapproved financing may have an edge over others who do not, on grounds that your ability to secure financing is more certain than that of rival bidders.

Because preapprovals have relatively short shelf lives, it's wise to time your preapproval applications carefully so you can use them effectively. It's also important to know before you apply how long a preapproval will last. Here's an overview of how to apply for a preapproval and how to use it efficiently.

How Soon Should I Get Preapproved for a Mortgage?

Mortgage preapprovals typically last at most about three months, so it doesn't make sense to get one until you're ready to start making offers on a home. At that point, you should have done some homework on the housing market that interests you, engaged professionals to help with the homebuying process (real estate agents and an attorney experienced in home sales) and, ideally, taken a few steps to spruce up your credit profile to prepare for seeking a mortgage.

When you're ready to begin making purchase offers, you'll submit a preapproval application to the lender(s) of your choice. You'll likely be charged a fee of several hundred dollars, but in most cases you can get that back as a credit if you end up getting your mortgage with that lender. Once you've supplied all required documents, a preapproval decision could take a little as one day, but typically takes a day or two longer. Once you receive a preapproval letter, include a copy of it with every offer letter you submit.

How to Get Preapproved for a Mortgage

Applying for preapproval is essentially the same as applying for a mortgage: The lender will review your credit history, income, assets, debts, tax returns and employment history. Lenders typically require you to provide proof of ID and documents such as pay stubs, tax returns and bank statements. They'll also require your authorization to review your credit report from one or more of the three national credit bureaus (Experian, TransUnion and Equifax), and to request credit scores based on one or more of those credit reports.

Mortgage preapproval differs considerably from a similar-sounding process called mortgage prequalification. Prequalification requires answering a few questions at the mortgage issuer's website, without submitting any of the backup documentation required for preapproval. Typically, you'll be asked to provide your income, how much you plan to use for a down payment and your Social Security number so the lender can check your credit score. You may also be asked about your monthly expenses.

Based on your answers, the lender will let you know whether it considers you eligible to submit a full mortgage application and, if so, roughly how much it is willing to lend you. Prequalifying is a great way to check out a number of mortgage lenders quickly and to narrow down your choice of potential lenders.

Does Mortgage Preapproval Affect Your Credit?

Mortgage preapproval typically has a small effect on your credit scores: The credit check needed for mortgage preapproval causes an entry known as a hard inquiry to appear on your credit report. Hard inquiries can cause credit scores calculated by the FICO® Score and VantageScore® scoring systems to drop slightly, typically by only a few points (if at all). As long as you keep up with your bills, a score reduction related to a hard inquiry typically lasts only a few months. The inquiry won't be factored into your scores after a year, and will drop off your credit report altogether after two.

Mortgage preapproval can give you a strategic edge over buyers competing with you in a tight real estate market, but because preapprovals are relatively short-lived, it's best to get one only when you're ready to close the deal on a home purchase.