Pre-approval

Pre-approval moves the conversation from stated numbers to verified ones. The lender pulls credit, collects income and asset documentation, often runs the file through an automated underwriting system, and then issues a letter naming a maximum loan amount or purchase price, usually with an expiration date.

Worked example. A buyer pre-qualified at roughly $400,000 based on a self-reported $9,000 monthly income. At pre-approval, the lender verifies base pay of $8,200 because a bonus has less than two years of history, and the credit report shows a $350 student loan payment the borrower forgot. Recomputing the ratios on verified figures trims the supportable price to about $360,000. That gap is why pre-approval matters before the borrower writes offers.

A pre-approval is conditional. Typical remaining conditions include a satisfactory appraisal, clear title, no material change in income or debts, and updated documents if the letter ages out. It is not a Loan Estimate and not a final commitment. Lenders use different labels for the same step; what matters is whether credit was pulled and documents were reviewed. If they were not, the borrower has a pre-qualification, whatever the letter says.