What Is a Mortgage Pre Approval?

A mortgage pre approval is a lender’s written estimate of how much you may be able to borrow for a home purchase. It is based on verified financial documentation and gives you a clear picture of your buying power before you shop for a home. A pre approval is stronger than a pre qualification because it relies on verified data, not estimates.

Why Pre‑Approval Matters

Shows sellers you’re serious — strengthens your offer.
Clarifies your price range — focus on homes you can confidently afford.
Identifies issues early — gives time to address credit or documentation gaps.
Speeds up the final loan process once you’re under contract.

What Lenders Review During Pre‑Approval

Lenders evaluate four primary areas:

1. Credit History & Score

Determines your likelihood to repay and impacts loan terms.
Higher scores generally mean better interest rates.

2. Income & Employment

Verification of stable income from paystubs, W‑2s, tax returns, or business records (for self‑employed borrowers).
Typically includes review of job history and consistency.

3. Assets

Documentation of funds for:

Down payment
Closing costs
Required reserves

Includes checking/savings accounts, retirement funds, investments, or gift letters if applicable.

4. Debt‑to‑Income (DTI) Ratio

Compares your monthly debts to your gross monthly income.
Helps determine what monthly mortgage payment you can comfortably handle.

Documents Typically Required

While requirements vary by lender, buyers should be prepared to provide:

Income

Recent paystubs (last 30 days)
W‑2s (last 2 years)
Tax returns (last 2 years, especially for self‑employed borrowers)
Employer contact information

Assets

Bank statements (last 2 months)
Retirement/investment account statements

Other Items

Government ID
Social Security number
Authorization to pull your credit report
For homeowners: current mortgage statement, property tax bill, and insurance details

How the MSDFCU Pre‑Approval Process Works

1. Application

You complete a mortgage application with basic financial and personal details. When determining the loan amount to apply for, you need to put at least 5% down (20% to avoid PMI). On a vacation property, you need to put at least 10% down (20% to avoid PMI).

At the end of the application when you are asked “Is there anything else you would like to tell us about your application” please state you would like a Pre-Approval.

2. Document Collection

You submit income, asset, and other required documentation for us to review.

3. Credit Check – Make sure your credit is not frozen.

MSDFCU pulls a credit report to analyze credit history and scores.

4. Underwriting Review

A loan officer evaluates your full financial profile for loan eligibility.

5. Issuance of Pre‑Approval Letter

You receive a written pre‑approval specifying:

Purchase amount
Loan amount
Estimated monthly payment
Conditions that must be met before final approval

How Long Pre‑Approval Lasts

Pre‑approvals are valid for 90 days.
If your home search takes longer, you would have to reapply and send in updated documents.

What Can Affect Your Pre‑Approval

To avoid delays or changes in loan eligibility, avoid major financial changes, such as:

Opening or closing credit accounts
Large unexplained deposits
Job changes
New loans (car, credit card, personal)

Benefits of Getting Pre‑Approved Early

Helps you plan a realistic budget
Positions you to act quickly when you find the right home
Gives your agent confidence in structuring competitive offers
Reveals potential improvement areas (credit, savings, etc.) before you shop

Next Steps

Gather financial documents.
Go to “Start a New Application” on the MSDFCU mortgage website
Review your loan options and estimated monthly payments.

Begin your home search with confidence!