How To Get Pre Approved for a Home Loan - Ultimate Guide (2025)

So in today's video, I'm gonna be explaining the pre-approval process from start to finish, everything that you need to know. I'm also gonna be sharing different tips and red flags because you might be working with someone already, you get to the end of this video and you're like, wow, they did not do any of that, or they're doing it all. But either way, it's important for you to know. And if you're new to my channel, my name is Meredith. I'm a mortgage broker. I put out educational videos every single week. So make sure you hit that subscribe button. Now let's get into it. Okay, so here's the overall timeline of when to get pre-approved. So when you're about six months out from buying a house, you first wanna talk to a lender, get all your questions answered. What I do with my clients is I ask them specific questions upfront during this time to see if there's anything that you need to work on. And then we come up with a really good plan and that you need to work on in the meantime. Then in about three months out from buying a house, that's when you actually want to get pre-approved at that time. And a big red flag is if you get a pre-approval letter without even speaking to a lender, a lot of big companies do this and there's a lot of intricacies that goes into getting pre-approved. So just know that pre-approval letter is not actually solid. Now let's go over the first step on getting pre-approved. Okay, so there's really three key factors that lenders and banks look at whenever you're getting pre-approved. And number one is gonna be your credit score. Now your credit score directly impacts what your interest rate is gonna be. So the higher your credit score, the better interest rate you're gonna get. Now your income and how much income and how much debt you have is gonna directly impact how much buying power you have or how much your pre-approval amount is. So the more income that you bring and the less debt that you have, the more you'll get approved for. And then number three is how much savings or how much cash you have in the bank because that's gonna impact your down payment and your cash to close. Now these all work together. You can't have one without the other. Now a good tip is multiply your yearly income by either three or four. And this will give you a rough estimate of how much your pre-approval amount is or how much your buying power is. So for example, if you have a yearly income or your household income is 60K, if you have a lot of debt, multiply it by three, you'll probably get approved for somewhere in the 180 range. Now you multiply it by four if you don't have much debt and this will put you in the 240 range. Now this is really important. Do this up front so that this will set up your expectations correctly. Okay, so here is the pre-approval process. Now this is specific to what I do and I first want to talk to you over the phone. So you can schedule a phone consult with me and I don't directly just send you to a link right up front to fill out a loan application and the reason is I wanna get to know your situation, what's going on with you. I wanna answer any questions that you have up front for me and when I'm going through the phone consult, I'm hitting those key major factors of the pre-approval. So I'm gonna be asking you questions about your credit score, where it's at. I'm gonna be asking a lot about how much income you have, how much debt, how your income is structured, how long you've been at the job, do you have a two-year job history? This is probably the most important key factor of the pre-approval process because like I said before, it directly impacts how much your pre-approval amount and a lot of times, lenders don't ask a lot of questions up front and what ends up happening is you send in the documents, they don't look at it or they don't really understand, then you go under contract, then the underwriter starts picking apart your income. If you're hourly, why aren't you working 40 hours a week? Why are you working 32 this week, 34 the next week? And all of this can be avoidable if you ask the right questions up front. Now I'm also gonna be asking you how much money you have in the bank because that's gonna depend on how much you have for down payment. If you need to do maybe a down payment assistant program and my main thing is I'm gonna be identifying any roadblocks up front and we're gonna come up with a plan for this. Now a big red flag a lot of lenders do is not giving you guidance and not really giving you options on what to do. Now here's what you'll know coming out of the phone consult. So number one, you're gonna know how much your pre-approval amount is. Number two, we're gonna go over the type of loan that's gonna fit your needs and why that works the best for your situation and number three, we're gonna be going over the estimated monthly payment of how much your pre-approval amount and this is really important because how much you get approved for might not be comfortable or where you wanna be as far as monthly payment, how much you wanna afford. So at the end of the day, you know your situation better. So we go through different scenarios on monthly payments and I'll give you, hey, if you wanna be at this monthly payment, here's a rough estimate of the purchase price where you need to be at and number two, we'll go over how much you need to know for your cash to close, which is your down payment and your closing costs. Okay, so the next step is gonna be sending in your documents and the reason we ask for these documents up front is just to verify to make sure that there's not gonna be any issues with your income. These are the documents that the underwriter is actually gonna be looking at. So we just wanna make sure that all the income calculations, everything is correct up front and if you are a W-2 employee, so you work for someone, you work for a company, then we're gonna need to look at your last 30 days of pay stubs and we're also gonna need your last two years of W-2s. Now, W-2 is the form that you use to file your tax returns and you get them at the end of the year. Now, if you're a 1099 business owner or you're self-employed then we're gonna need to see your tax returns and specifically the last two years of your last two years of filed tax returns and what we're looking at on these tax returns is your actual taxable income, which is your income minus all of your write-offs and expenses and that's how we get to your actual taxable income amounts. Now, let's say everything checks out and let's go over the next step. Okay, so now that we've looked over your documents and everything checks out, the next step is I'm gonna connect you with a realtor and since I do loans across the US, I have a really vast network of realtors that I work with because the main thing, especially if it's your first time, is you wanna work with someone that's experienced and knows what they're doing and here's the thing, number of years in the business does not equal experience and the reason is is the real estate market is changing yearly, sometimes even every six months, so you wanna make sure that you're working with someone that's actively doing deals in the current market so they know what's going on and you also wanna make sure that your lender and your realtor is working together throughout this process as well. Then from there, you're going to start looking at homes, you're gonna do the home shopping and here's a pro tip, what I do is I'm gonna be involved when you're out shopping for homes with your realtor and the reason is is I'm gonna be running estimated monthly payments, estimated numbers on whatever house that you've actually found and the reason is is property taxes can change from house to house, you're gonna have one house that the property taxes are $200 a month and then you can have another house which is the same purchase price and the property taxes are $400 a month so it's very important that you do this upfront. Also, I'm not going to actually be doing a hard pull until you've actually found the house that you like, you're ready to submit an offer and the reason is is it can take a lot of time for you to, between the pre-approval process and actually finding a home and it doesn't make sense, we do enough work upfront, it doesn't make sense to pull your credit upfront if you don't find a house until another couple of months. Now, let's go over the overall timeframe from getting pre-approved to getting the keys in your hand. Okay, so here's the overall timeframe from getting pre-approved all the way to getting the keys in your hand. Number one, like we said before, about three months out before you plan to buy a house, that's when you actually wanna get pre-approved. Now, the pre-approval process doesn't take long at all, it takes about 24 hours. Then, after you're pre-approved, the home shopping process, it can take some time, it can take anywhere from one to three months. Now, once you've found the house, you went under contract, generally speaking, the amount of time it takes to get the keys in your hand takes about 30 days. Now, this can get sped up, fastest one I've done is about 10 days and it can take a little bit longer, it just depends on what you and the seller agree. Now, let's go over the four major types of loans. So number one, you have an FHA loan. Now, FHA loans are, generally speaking, good for those that have a lot lower credit score, around a 620 plus, or they have a lot higher debt load on a monthly base. Number two is gonna be a conventional loan. Now, this loan is good for those that have a little bit better credit score, generally speaking, around a 680 plus, and also wanna put down a higher down payment than the minimum amount. Then you have USDA, and these are for those that wanna buy a house outside of the city limits in a rural development. Also, you don't need a down payment with USDA loan. Then you have a VA loan, which is for those that are either active or have been in the military, and that's also 0% for a down payment. Now, you do have down payment assistant programs, and with down payment assistant programs, they are not their own separate loans. What they do is they're either coupled with a FHA or a conventional loan. And what it does is it covers the down payment. Now, it's important to understand the stipulations that come with down payment assistants, because it's never free money. You either have to pay it back within a certain period of time, or you're gonna get a little bit higher interest rate, but you don't have to pay it back. So it's important to know this up front. Okay, so if you're buying your primary residence, so the house that you're gonna be living in, here is the minimum down payment that you'll need for each different type of loan. So number one, if you're doing an FHA loan, you'll need 3.5% for the down payment. If you're doing a conventional home, conventional loan, and you're a first-time home buyer, then you'll need a 3% for the down payment. Now, if you're not a first-time home buyer, then the minimum down payment is gonna be 5%. And with a USDA loan, there is no down payment, so it's 0%. Same thing with a VA loan, it's also 0%, if you're buying your primary residence. Now, if you're buying an investment property, then the minimum down payment is gonna be 20%. So if you're planning to buy a house and you want to know exactly how much your buying power is, how much you'll get approved for, click on the link in the description, schedule a call, and I'll be in touch.