Pre-approval is essential before seriously shopping for homes. Sellers want to see you've been vetted by a lender before accepting your offer.
What Lenders Evaluate
Credit Score
- 620+ for conventional loans
- 580+ for FHA loans
- 740+ for best rates
Debt-to-Income Ratio (DTI)
Your monthly debt payments divided by gross monthly income.
- Front-end DTI (housing only): Ideally under 28%
- Back-end DTI (all debt): Ideally under 43%
Down Payment
- Conventional: 3-20%+
- FHA: 3.5%
- VA: 0%
- Jumbo (Bay Area loans over ~$1.15M): 10-20%+
Employment & Income
- 2+ years of stable employment
- Tax returns, W-2s, pay stubs
- Self-employed: 2 years of tax returns showing stable income
Assets
- Bank statements showing down payment plus reserves
- Gift letters if using family funds
Pre-Qualification vs Pre-Approval
Pre-qualification is a quick estimate based on self-reported information. It is not verified.
Pre-approval means the lender has checked your credit, income, and assets. This is what sellers want to see.
Tips
- Shop rates within a 14-day window to minimize credit impacts
- Don't open new credit or make large purchases before closing
- Have documents ready before applying