How Long Does a Bank Pre-Approval Last?

A bank pre-approval is a conditional commitment from a lender, indicating the maximum amount they are willing to lend for a home purchase. This document establishes a clear budget for homebuyers, helping them focus their property search within an affordable range. It also signals to sellers and real estate agents that a buyer is serious and has verified financial capacity, providing a competitive advantage.

Typical Duration of Pre-Approval

Most bank pre-approvals are valid for a period ranging from 60 to 90 days. Lenders base their conditional commitment on a snapshot of the borrower’s income, credit history, and debt obligations at the time of application. This timeframe ensures the financial information used for the assessment remains current.

The precise expiration date will be stated on the pre-approval letter. This fixed period accounts for potential fluctuations in market conditions, such as interest rate changes, and changes in the borrower’s personal financial situation. A current pre-approval helps homebuyers plan their search and make competitive offers.

Factors Affecting Pre-Approval Validity

Significant alterations to one’s credit score, such as taking on new debt, making large purchases, or missing payments, can cause a pre-approval to be re-evaluated or invalidated. Lenders perform a hard credit inquiry during the pre-approval process, so maintaining a stable credit profile is important.

Changes in income or employment status also directly affect pre-approval. A job loss, career change, or a shift to a probationary period can raise concerns for lenders regarding consistent income. An increase in monthly debt obligations, which impacts the debt-to-income ratio, can also reduce the loan amount a borrower qualifies for.

Market shifts, particularly significant fluctuations in interest rates, can alter the borrowing capacity and terms of a pre-approval. It is important to communicate any financial changes to the lender, as they will reassess eligibility based on updated information.

Distinction Between Pre-Approval and Pre-Qualification

While often used interchangeably, pre-approval and pre-qualification represent distinct stages in the home loan process. Pre-qualification is a less formal estimate of borrowing power, based on self-reported financial information without extensive verification. It provides a general idea of what a borrower might afford and can be a good initial step to set a budget.

Conversely, pre-approval involves a more thorough review of a borrower’s financial documents, including pay stubs, bank statements, and tax returns, and includes a hard credit check. This process results in a stronger, conditional commitment from the lender. Real estate agents and sellers prefer offers from pre-approved buyers because it demonstrates a higher level of financial readiness and reduces uncertainty in the transaction.

Next Steps When Pre-Approval Nears Expiration

As a pre-approval approaches its expiration date, or if a home has not yet been found, borrowers should proactively contact their lender. Renewing or extending a pre-approval involves providing updated financial documents, such as recent pay stubs and bank statements, to ensure the lender has current information. This process may also require another credit check to assess any changes to the credit score and history.

Renewing the pre-approval ensures the estimated loan amount remains accurate and the buyer’s offer remains competitive in the housing market. While the renewal process is quicker than the initial application since the lender already has most information on file, acting promptly avoids delays. Changes in financial circumstances or market conditions might result in different loan terms upon renewal.