How Long Is a Mortgage Preapproval Good For?

A mortgage pre-approval is a formal statement from a lender indicating their preliminary commitment to lend a specific amount of money for a home purchase. It provides a homebuyer with a clear understanding of their borrowing capacity, helping to narrow down their home search to properties within an affordable price range. This document also signals to real estate agents and sellers that a prospective buyer is serious and likely to secure financing. It streamlines the home-buying process.

Standard Validity Period

A typical mortgage pre-approval is valid for a period ranging from 60 to 90 days. Some lenders, however, may issue letters with a shorter validity. Lenders establish this duration because a pre-approval represents a snapshot of the borrower’s financial health at a particular moment. Financial markets, interest rates, and a borrower’s personal financial situation can change rapidly, necessitating a periodic re-evaluation.

Factors Causing Early Invalidity

A pre-approval can become invalid before its stated expiration date if there are significant changes to a borrower’s financial profile. A notable drop in credit score, perhaps due to missed payments or increased credit utilization, can alter the lender’s risk assessment. Taking on new debt, such as a car loan or significant credit card balances, can negatively impact the debt-to-income ratio, making the borrower less eligible for the approved loan amount. Changes in employment status, including job loss, a new job with a probationary period, or a shift to a commission-only role, can also invalidate a pre-approval, as they affect the stability of income. Large, unexplainable deposits or withdrawals from bank accounts, or significant purchases that deplete cash reserves, might also raise concerns.

Renewing or Reapplying for Preapproval

If a pre-approval is nearing its expiration or has already expired, a borrower will need to renew or reapply to maintain an active status. Renewing typically involves submitting updated financial documentation to the lender, such as recent pay stubs, bank statements, and potentially updated tax returns. The lender will usually conduct a new credit check to ensure the borrower’s creditworthiness has not deteriorated. This process is often quicker than the initial application since much of the borrower’s information is already on file.

Pre-qualification vs. Pre-approval

It is important to distinguish between a mortgage pre-qualification and a mortgage pre-approval. Pre-qualification is a less formal process, providing an estimate of how much a borrower might be able to afford based on self-reported financial information. This initial step does not involve a thorough verification of documents or a hard credit inquiry. In contrast, a mortgage pre-approval involves a comprehensive review of the borrower’s financial documents, including income, assets, and debts, along with a hard credit check. This more rigorous process results in a conditional commitment from the lender.