Homebuyers

How Long Does Mortgage Pre-Approval Take?

Getting a pre-approved mortgage is an essential step in the homebuying process. A pre-approval letter is a statement from a lender stating that they are tentatively willing to lend you a specific amount of money to purchase a home.

Real estate agents generally won't work with buyers unless they can show proof of pre-approval. What's more, making an offer with a pre-approval letter in hand generally gives an offer more weight in the eyes of a seller. Pre-approval also helps buyers because it gives them a strong idea of their buying power as they begin their home search.

During the pre-approval process, a lender reviews your credit score, income, and other financial factors to provide an estimate of the size of the mortgage you can obtain. How long does mortgage pre-approval take? Here's a look at the full process.

Steps in the Mortgage Pre-Approval Process

The mortgage pre-approval process is like a trial run for actual mortgage approval. You'll submit an application for pre-approval that requires you to provide documentation verifying your identity and financial details. Here's what lenders generally require for mortgage pre-approval:

• Social Security number
• Employment verification
• A credit background check
• Copies of pay stubs from the past 30 to 90 days
• Recent bank statements/proof of assets
• W-2 statements dating back two years
• Filed tax returns from the past two years

If you're applying for mortgage pre-approval as a self-employed person, your lender will likely ask for Form 1099, bank statements, recent tax returns, profit/loss statements, and balance sheets. Requirements for mortgage pre-approval can vary slightly by lender. During the pre-approval process, a lender verifies information provided by checking your credit score, conducting employment verification, and determining your debt-to-income ratio (DTI) to see how much you can borrow. As a potential borrower, you'll also be asked about the down payment amount you intend to use.

Factors Affecting the Duration of Mortgage Pre-Approval

How long does a mortgage pre-approval take under normal circumstances? Pre-approval results can be provided anywhere from a day to a few weeks after an application is submitted. Here's a look at some factors that can influence the waiting period.

Complexity of Your Financial Situation

People with complex income sources generally wait longer for mortgage pre-approvals compared to salaried or hourly employees with single income streams. On average, verification is longer for a self-employed person. While a self-employed person may have the income needed to purchase the home they want, a lender can have difficulty verifying financial information. Self-employed people often need to provide extra information in order to demonstrate that they reliably make a certain income.

Under ordinary circumstances, lenders simply use a person's net income as a baseline for determining mortgage eligibility. Net income refers to the amount earned after taking deductions from gross income. This is pretty straightforward when looking at paychecks or W-2 statements. However, it's not always as simple when trying to determine net income for a self-employed person. Lenders generally need to spend more time reviewing documentation for income and assets when approving self-employed borrowers.

Let's say that you're a self-employed consultant in the financial services industry. Your income may consist of lump payments from dozens of clients per year. While your income is high, it can be inconsistent. As a result, your lender may look back several years to get an idea of the mortgage amount you can reasonably qualify for based on the profitability of your business.

The same is true in a situation where a person has complex income streams. This can include a person with side gigs or commission-based work. Additionally, someone who makes a large portion of their income from investments may need to spend more time submitting documents for proof of income to a lender.

Debt is another factor that can prolong the mortgage pre-approval process. While a person with a high income may technically have the money or assets needed to qualify for a home, carrying high debts can slow down the process. A lender needs to spend time assessing DTI to make sure that debts are in proportion to the rest of the financial picture. Some tips for simplifying the verification process include:

• Have all of your documentation ready at the time of applying.
• Check your credit score ahead of time to see if you need to make some changes to improve it.
• Avoid borrowing funds or making any major purchases before applying for a pre-approved mortgage.
• Make an effort to pay down debts before applying.
• Providing accurate contact information for your employer. If a lender has a hard time getting in touch with human resources or payroll, this can delay pre-approval.

Lender's Workload and Efficiency

A lender's capability and capacity can also impact process times for mortgage pre-approval. If demand is high, this can slow down processing times. However, some lenders are simply less efficient. There's no question that waiting for a slow approval can be frustrating. After all, getting your pre-approved mortgage is what's standing between you and being able to make offers on homes. That's why choosing the right lender based on their track record and customer reviews is important. A capable lender will have the technology and professional team in place to provide reasonable turnaround times on mortgage pre-approvals.

Average Timeframe for Mortgage Pre-Approval 

For the average applicant, mortgage pre-approval before buying a home takes seven to 10 days. While lenders can often provide a pre-approval letter sooner than that, it's important to factor in a larger window to ensure that you have plenty of time to make an offer after you begin looking at homes.

If you'd like a faster way to show sellers that your offer is serious, consider going through the process to pre-qualify for a home loan first. While pre-qualification doesn't replace pre-approval, it shows proof that a lender has reviewed your basic financial information to determine that you will likely qualify for a mortgage. When it comes to pre-approval vs pre-qualification, the big difference is that pre-qualification is a faster, simpler process that doesn't require the documentation of pre-approval. You won't need to submit tax forms, income proof, or credit information just yet.

Tips to Speed Up Your Mortgage Pre-Approval

Being honest and accurate will be important when applying for mortgage pre-approval. The biggest mistake that a borrower can make is trying to withhold information that they believe will harm their chance of being approved. Here are tips for speeding up the mortgage pre-approval process:

• Carefully review your lender's requirements for pre-approval.
• Submit the full documentation provided.
• Be responsive when a lender reaches out to you for more information or additional documentation. A lender cannot move forward with unanswered questions or missing documents.

What to Do While Waiting for Pre-Approval

The best advice after submitting a pre-approval application is to simply keep chugging along. Avoid making any drastic changes that can impact your finances. For example, quitting your job, reducing your work hours, or changing your address can all cause the process to be delayed. You should also avoid taking out any new loans or lines of credit that will shift your DTI. If you've been diligently saving for a down payment, continue on that path.

Of course, there's also an emotional side to waiting for a mortgage pre-approval. It's important to prepare for potential outcomes. In some cases, the mortgage amount on your pre-approval letter may be lower than expected. It will be time to go back to the drawing board with your real estate agent to look for homes in a lower price range. This can be a time to prioritize specific home features over others. If the mortgage amount comes in higher than expected, you'll need to decide if you prefer to stay under budget with your home purchase or max out your borrowing potential.

How to Handle Delays in Pre-Approval

If you feel that your mortgage pre-approval is taking longer than average, reach out to your lender to ask if they need any additional information from you. You should also stay in touch with your real estate agent to update them on the progress of your pre-approval.

FAQ

What is the quickest time in which you can get pre-approved?

In some cases, a lender may be able to provide a mortgage pre-approval within a day. However, a more realistic estimate based on national averages is seven to 10 days.

How often do mortgage pre-approvals get delayed?

It's common for mortgage pre-approvals to get delayed if the borrower submits incomplete or inaccurate information. If additional verification is required due to a borrower having self-employment or complex income streams, this can also delay the pre-approval letter.

Can you expedite a mortgage pre-approval?

While there is no official expedited process for how to get pre-approved for a loan, gathering your W-2, proof of income, tax returns, statements proving debts and assets, and other required documentation can potentially reduce turnaround time on a mortgage pre-approval letter.