A young pregnant woman is in the living room of her new condo with her dog that she purchased after getting pre-approved for a mortgage.

    A pre-approval is a requirement to buy a home. Most realtors, and sellers, will not even go through the negotiation process with a potential buyer if there is a chance the mortgage could be denied.


    Pre-qualification is typically an estimate on what loans a buyer can qualify for based on a survey about their financial history. This is why a pre-qualification is a faster process than pre-approval.

    A pre-approval is generally more beneficial to buyers planning to buy than a pre-qualification. After an in-depth verification process, the lender will fill out a commitment form for a decided amount based on submitted documentation. This form is known as a pre-approval letter, and it makes buyers’ offers substantially stronger.


    The more in-depth part of the pre-approval process occurs when the lender requires documented proof of where the buyer’s funds come from for their down payment and closing costs. The lender will need to perform an employment verification, gather any evidence of gifted funds that will be used for the purchase, statements for investment withdrawals, or any other activity within their accounts before finalizing the pre-approval.

    Buyers can significantly speed up their pre-approval process by having all of their documentation prepared for their lender.

    Most lenders require the same documentation to complete a pre-approval for a mortgage. More information may be needed in certain instances.

    The necessary documents to complete a pre-approval include:

    • At least two years of financial records
    • W2s
    • Completed 1099-S form
    • Copies of your federal tax returns
    • Current banking records


    Buyers will have to provide proof of ownership of all their assets. Any cash gifted to them to assist with their payment needs an accompanying letter indicating the gift does not need to be paid back. JVM Lending’s Mortgage Analysts can help provide useful templates for gift fund letters.

    Checking the buyer’s credit is part of the lender’s process. While some may worry this will affect their credit score, the actual effect on credit scores from reports pulled by lenders is very minimal. This is very beneficial for buyers because they can be aware of any discrepancies in the credit report early to avoid becoming a problem later.

    While this process may seem daunting, our skilled mortgage experts can help you prepare everything in advance and walk you through each pre-approval step.

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