What Is Pre-Approval?
Pre-approval is a lender's commitment (in writing) that they'll loan you a specific amount of money at a specific interest rate, based on a thorough review of your financial situation. It's not a loan yet - it's proof you CAN get a loan.
In the competitive Dallas-Fort Worth market, pre-approval is non-negotiable. Sellers won't even consider offers without it. Think of it as your ticket to the game.
Pre-Qualified vs. Pre-Approved
These terms sound similar but they're very different in terms of buying power.
- 5-minute phone call or online form
- Lender takes your word for it
- No credit check required
- No documentation needed
- Sellers don't take it seriously
- Complete financial documentation
- Hard credit check performed
- Income and assets verified
- Underwriter review completed
- Written commitment from lender
What Lenders Look For
Understanding what lenders evaluate helps you prepare and present your strongest application.
Credit Score
620+ for conventional loans, 580+ for FHA. Higher scores get better rates. They check payment history, credit utilization, and any collections or bankruptcies.
Debt-to-Income Ratio (DTI)
43% or lower is ideal. Your monthly debts divided by gross monthly income. Lower DTI means less risk for the lender and better rates for you.
Income Stability
2 years of steady income in the same job or field. W-2 employees have it easy; self-employed need tax returns and profit/loss statements.
Assets & Reserves
Down payment + closing costs + 2-6 months of mortgage reserves. Shows you won't immediately default if something unexpected happens.
The Pre-Approval Process
Here's what happens from start to finish when getting pre-approved.
Gather Your Documents (1-3 days)
Collect pay stubs, W-2s, bank statements, and ID. The more organized you are, the faster this goes. Pro tip: scan everything to PDF for easy sharing.
Research & Contact Lenders (1-2 days)
Talk to at least 3 lenders: your bank, a credit union, and a mortgage broker. Get rate quotes, understand fees, and ask questions. Don't commit yet - you're shopping.
Submit Application & Documents (1-2 hours)
Complete the formal application (Form 1003), upload your documents. They'll pull your credit. Be responsive to any requests for additional documentation.
Underwriter Review (1-3 days)
The underwriter reviews everything: credit, income verification, assets, employment. They may request additional documents - this is normal.
Get Your Pre-Approval Letter (Same day)
Your pre-approval letter states your approved loan amount, estimated rate, and loan type. Valid for 60-90 days. This is your ticket to making offers!
Documents You'll Need
Gather these before contacting lenders. Being organized shows you're serious and speeds up the process.
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Last 2 years of W-2 forms from employer(s)
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Last 2 months of pay stubs showing year-to-date earnings
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Last 2 years of tax returns (if self-employed)
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Proof of other income (alimony, VA benefits, social security)
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Last 2 months of bank statements (all accounts)
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Retirement account statements (401k, IRA)
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Investment account statements
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Gift letter (if receiving gift money for down payment)
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Driver's license or government-issued photo ID
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Social Security number
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Address history for last 2 years
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Employment history for last 2 years
Questions to Ask Every Lender
Remember: YOU are interviewing THEM. Lenders need your business. Ask these questions and compare answers.
Rates change daily. Get the exact rate for YOUR credit score and loan type, not the advertised "starting at" rate.
Get the complete breakdown: origination fees, processing fees, underwriting fees. Watch for hidden costs that add up.
Should be 1-3 days max. Longer indicates an inefficient lender or missing documents on your end.
DFW has several programs offering $5,000-$15,000 in assistance. Not all lenders participate, so ask upfront.
Pressure to commit immediately, vague about fees, promises that sound too good ("We approve anyone!"), poor communication, or no NMLS license number.
Credit Impact: The Truth
Worried about your credit score? Here's what actually happens.
- Hard inquiry drops score 3-5 points temporarily
- Impact is minimal and gone in 12 months
- Multiple mortgage inquiries in 45 days count as ONE
- Shop around freely within that window
- Misses out on homeownership entirely
- Keeps paying rent while credit sits unused
- 5 points is far less costly than opportunity cost
- Can't make competitive offers without it