Getting Preapproved for a Mortgage

Prequalification vs. preapproval

These terms are often used interchangeably, but they're different. A prequalification is an informal estimate based on self-reported information — no credit check, no documentation review. It takes minutes but carries little weight with sellers.

A preapproval involves a full credit pull, income and asset verification, and a preliminary underwriting review. It results in a conditional commitment from the lender to fund a loan up to a specified amount. In competitive Tennessee markets, sellers expect preapproval letters — not prequalifications.

What lenders evaluate

Preapproval involves a review of four main factors:

• Credit: Your credit scores from all three bureaus (Equifax, Experian, TransUnion). Lenders typically use the middle score of the primary borrower. The score affects which programs you qualify for and what rate you'll receive.
• Income: Gross monthly income from all sources — W-2 employment, self-employment, rental income, Social Security, etc. Lenders calculate your debt-to-income ratio using this figure.
• Assets: Bank statements, investment accounts, and retirement accounts. Lenders verify you have enough for the down payment, closing costs, and reserves.
• Employment: Two years of employment history. Gaps, job changes, or recent transitions to self-employment require explanation and documentation.

What you'll need to provide

• Last 2 years of W-2s or 1099s
• Last 2 years of federal tax returns (all pages)
• Last 30 days of pay stubs
• Last 2–3 months of bank statements (all pages, all accounts)
• Government-issued photo ID
• Social Security number (for credit pull)
• If self-employed: business tax returns, profit/loss statements, business bank statements

How long does preapproval take?

With a complete file, a preapproval can be issued in 24–48 hours. Incomplete documentation is the most common cause of delays. Having everything organized before you apply speeds the process significantly.

Preapproval letters are typically valid for 60–90 days. If your letter expires before you find a home, you'll need to update your documentation and get a new letter.

Does preapproval hurt your credit?

A mortgage preapproval requires a hard credit inquiry, which may temporarily lower your score by a few points. However, multiple mortgage inquiries within a 14–45 day window are typically treated as a single inquiry by the credit bureaus — so shopping multiple lenders in a short period has minimal additional impact.

The impact of a hard inquiry is small and temporary. Don't let concern about a few points prevent you from getting properly preapproved before you start shopping.