Pre-Approval Letter
A letter from a lender stating that a buyer has been preliminarily approved for a mortgage loan up to a specified amount, subject to property appraisal and final underwriting.
When Its Used
Submitted with financed offers to demonstrate the buyer's ability to obtain financing. Should be dated within 30 days and specific to the purchase price.
Key Sections
Buyer name(s); Approved loan amount; Loan type (conventional, FHA, VA); Interest rate (if locked); Expiration date; Lender contact information
Common Mistakes
Pre-qualification letter instead of pre-approval; Loan amount less than purchase price; Expired letter; Different buyer name than on contract; No contact info for verification
Pro Tip
Call the lender to verify the letter before presenting an offer. A strong pre-approval includes income and asset verification. Ask for a property-specific letter when possible.
