If you want to buy a home, your first step should be getting preapproved. That’s right, you should get preapproved even before you start house hunting.
Why? Because a preapproval* gives you two key pieces of information: whether you’re qualified for a loan, and your estimated purchase price – in other words, how much house you can afford.
But how long does a mortgage preapproval last?
“Your preapproval is good for 120 days, as your credit report is good for that amount of time,” says Sandy Krestan, a senior loan officer with Fairway Independent Mortgage Corporation (which owns Home.com) in Phoenix, Ariz.
Of course, that begs the question: What happens after 120 days? Do you need to get preapproved all over again? We’ll answer all your preapproval questions below.
This will indicate how much money you can borrow to purchase a property and assure a home seller that you have a lender lined up. But it’s natural to wonder: How long does a mortgage preapproval last?
Learn more about the window of time involved with a mortgage preapproval, when a preapproval expires, how to get it renewed, what happens with a preapproval, and more.
What's in this Article?
A mortgage preapproval is a conditional loan approval to buy a house. When you apply for a preapproval, your lender will pull your credit score and credit history, as well as look at your recent bank account statements, tax returns, pay stubs, and other documentation to determine whether you’re qualified for a loan.
A mortgage preapproval letter tells you three important pieces of information:
- Whether you can get approved for a loan
- How much you can borrow to buy a house
- What types of loans you can get
You want to know all of this before you start looking at houses because you don’t want to get your heart set on a house that you can’t afford, or that you won’t be able to buy with your particular loan type. For instance, FHA and VA loans have certain property requirements, so if you’re using one of those loan programs, you want to make sure you’re looking at houses that will pass the appraisal.
Preapprovals are also the key to seeing properties at all.
“Some real estate agents won’t even show borrowers homes without one because they don’t want to waste their time with someone not able to buy the home,” says Greg Sandler, a senior vice president with Fairway in Rocklin, Calif.
Likewise, sellers won’t consider an offer unless the buyer proves they can close the deal.
“When shopping for a home in a competitive market, buyers need to show that they’re prepared to make the purchase with either a cash offer or a mortgage preapproval. The latter shows that a loan officer has reviewed your financial information and your lender will approve you for a mortgage loan,” says Bridget Harvey, associate real estate broker at Douglas Elliman in New York City.
A mortgage preapproval is good for 120 days from the date your lender pulls your credit report, says Jeff Satre, a production manager with Fairway in Ashburn, Va. “After this time period, the credit, income, and assets must all be updated,” he says.
That’s because your credit score and credit history strongly influence the type of loan you can get, your interest rate, and how much you can borrow. Your lender will need to update your preapproval if your credit score has changed or you’ve had a change in employment status or income.
There’s not much you can do about needing to have your credit pulled again, as credit score is a key requirement for all loan programs. But you don’t have to wait 120 days to send updated financial documents to the loan officer with whom you’re working.
“Keep in mind that getting an updated paystub or bank statement is always a good idea,” Krestan says. “We know life happens, and if there is a change to your income, employer, credit, or assets, just know it is always a good idea to call us. We will walk you through how that could affect your preapproval.”
Proactively submitting updated information can speed up the preapproval process if you haven’t found a home in the initial 120-day time frame.
The good news is that, whether you are preapproved for a VA loan, FHA loan, USDA loan, or conventional loan, if your preapproval expires, you can request a renewal or extension from your lender.
Your lender may be able to grant an extension without pulling your credit, says Kevin Kurland, president of Home by Choice in New York City. But that’s not a guarantee, and there are downsides to having your credit pulled again.
“Any time you have your credit checked by an outside organization, it can lower your credit score,” Harvey cautions.
A mortgage preapproval requires a “hard inquiry,” which is when a lender does a credit check on score and your credit report. Hard inquiries can temporarily lower your credit score, but the impact should be fairly small if you otherwise have good credit history.
A hard inquiry is a necessary part of the home loan process, and fears about a hard inquiry shouldn’t stop you from pursuing your homeownership goals.
The best way to offset any potential negative impact is to pay all of your bills on time and keep your credit card balances low. Additionally, if you are comparing rates from multiple mortgage lenders, submit all of your mortgage applications in the same 30-day window. All of the hard inquiries from mortgage lenders will then count as one inquiry, minimizing the impact on your credit score.
You may have seen mortgage prequalifications advertised online and wondered what’s the difference between a prequalification and preapproval.
Typically, preapprovals are much stronger than prequalifications. When you get prequalified, you may be asked questions about your finances without having to provide documentation backing up the information. So the prequalification isn’t reviewed by the lender’s underwriting team or checked against loan program guidelines – it’s essentially a good faith assumption that the information you’ve provided is accurate.
A strong preapproval, such as the Fairway Advantage Preapproval offered by Home.com’s parent company, has been fully underwritten except for property details. That means that the lender has pulled your credit, verified your income, assets, and debts, and determined that you are qualified for a home loan.
Whether you get your preapproval at Fairway or another company, the important thing is that you have one in-hand when you shop for homes.
A preapproval means no surprises once you go under contract – your finances have already been vetted, and you and your lender are confident you’ll be able to move forward with the loan.
The difference between the two is important in today’s market, when so many homebuyers are competing for a limited number of properties. Sellers are looking for offers that not only offer the highest amount, but which have the highest chance of closing.
“These days a prequalification carries no weight, and a preapproval is needed with every offer,” Sandler says.
There’s a lot about finding a house that’s out of your control. If you’re in a popular real estate market, it may take a while to find a house you love that’s in your price range and on which you can make a competitive offer.
But getting preapproved will make you a strong homebuyer, and it will give your offer an edge. Stay focused on your home search and be ready to act when you find a place you want to buy.
And most importantly, stay in touch with your lender. Send them updated bank statements and pay stubs so that if you do need an updated preapproval, they can turn it around quickly for you and keep you in the game.
How long does a mortgage preapproval last? FAQs
When you get preapproved for a mortgage, your lender will do a hard credit inquiry, which can temporarily lower your credit score. However, the impact will be relatively small if you have a good credit score to begin with, and you practice good credit habits, such as paying your bills on time and keeping your balances low.
You can further minimize the impact of hard inquiries by submitting all of your mortgage applications within the same 30-day period, as they will count as a single inquiry. This can reduce the adverse effect of hard inquiries.
There is no limit on the number of times you can get preapproved for a mortgage. However, each time you get preapproved, your lender will pull your credit report, which can temporarily lower your score. Once you get preapproved, stay focused on your home search, as each preapproval is only valid for 120 days. After that, you can get the preapproval extended, but your lender will have to pull your credit again. The best case scenario is to go under contract on a home within 120 days from your first preapproval.
Your preapproval applies to your initial homebuying period – it tells you whether you can get a loan and how much you can borrow. Once you go under contract on a home, the full loan process begins, and your lender will request any updated financial documents they need, as well as details on the home. So you don’t need to worry about your preapproval expiring before closing on a loan. The concern is whether the preapproval will expire before you go under contract, because the preapproval states how much you can borrow and therefore whether you can afford a particular home.
*Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.
Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency.