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Getting Your Mortgage Prequalification Letter

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A prequalification letter is a mortgage lender’s best guess of how much you can borrow based on their initial review of your finances. Getting prequalified for a mortgage can help you avoid falling in love with a house outside of your budget. Additionally, having a prequalification letter will show a seller you have a lender’s backing and can afford to buy their house.

How to get a prequalification letter

You can get a prequalification letter in many cases with just your basic financial information. Typically, you’ll need to provide the lender with your monthly income, a ballpark estimate of your monthly debts and your best guess at how much money you’ll have for a down payment and closing costs.

Once you have that information ready, you can get your mortgage prequalification started using any of the following methods:

Online loan applications. Most loan officers can provide links that allow you to apply for a home loan online.

Smartphone apps. Some mortgage companies offer their own smartphone app you can download on your phone and use to securely fill out a loan application.

Phone application. You can provide your loan application information over the phone to a loan officer who can run your credit and review your information.

In-person application. Banks and credit unions typically have a loan officer on site who can take care of a prequalification letter while you’re finishing up your regular banking activities.

In almost all of these scenarios, the lender will review your information, run a credit report and issue the prequalification letter if you meet the lender’s guidelines. If not, they may make some suggestions for what you can do to prequalify for a mortgage in the future.

How long does it take to get a prequalification letter?

Technology makes it possible for lenders to issue a prequalification letter in a matter of minutes. You can upload financial information from your computer or phone, and the lender will typically email you a prequalification letter with details about the loan including:

  • The amount you’re prequalified for
  • The total payment including taxes and insurance
  • The type of loan program you qualify for (conventional, FHA, VA or USDA are the most common)
  • How long the prequalification letter is good for (usually 30 to 90 days)

Do you need more than one prequalification letter?

You won’t usually need more than one prequalification letter unless you switch loan programs. For example, if you received a conventional loan approval but decide to buy a home in a rural area that is eligible for a mortgage backed by the U.S. Department of Agriculture (USDA), you’ll need a new prequalification letter for a USDA loan.

THINGS YOU SHOULD KNOW Your prequalification letter is tied to a specific loan program. A conventional prequalification letter won’t be valid if you opt for a loan insured by the Federal Housing Administration (FHA). Here’s a quick refresher of the most common home loan programs and their minimum requirements.

Loan program Credit score minimum Down payment Program details 
Conventional  620 3% Requirements set by Fannie Mae and Freddie Mac
FHA 500 with 10% down
580 with 3.5% down
3.5% with 580 score
10% with 500-579 score
Insured by the Federal Housing Administration
VA  620 at most lenders, but exceptions possible 0% Guaranteed by the U.S. Department of Veterans Affairs for military borrowers
USDA  640 but exceptions possible 0% Backed by the U.S. Department of Agriculture for low- to moderate-income borrowers in designated rural areas

Does it matter where you get your prequalification letter?

As long as your letter comes from a licensed loan officer, it doesn’t matter where it comes from. If you’re applying for a down-payment assistance program, you may have to choose a lender approved to offer DPA programs for your prequalification letter.

What’s the difference between prequalified and preapproved?

Sometimes the terms prequalified and preapproved are used interchangeably, according to the Consumer Financial Protection Bureau (CFPB). Both typically include a review of your credit report, a calculation of your income and a look at your available funds for a down payment and closing costs based on what you put in your loan application.

However, a mortgage preapproval may carry a little bit more weight, because lenders usually ask for more documentation to ensure you have a solid chance at getting a full credit approval. Lenders may ask for:

  • A full month’s of pay stubs
  • Two years’ worth of W-2s
  • Two years’ worth of tax returns (if you’re self-employed)
  • Two months’ worth of bank statements
  • Explanations for any late payments, collections or other negative credit items
  • Documentation of child support, alimony or retirement income
  • Proof you served in the military (if you’re applying for a VA loan)
  • Explanations for gaps in your employment
  • Explanations for large deposits in your checking or savings account

If all of your financial ducks are in a row and you have a regular W-2 job with plenty of money in the bank and high credit scores, a prequalification letter should be more than enough for you to confidently start your house hunt. However, if you have any bumps in your credit history or variable income (like commissions or bonuses), it might be best to get a mortgage preapproval to avoid surprises after you’ve found your “dream” home.

 

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