What Is Pre-Approval and Why Does It Matter?

Being pre-approved means a lender has reviewed your financial documents and determined that you qualify for a specific loan amount. This is different from being pre-qualified, which is just an estimate based on self-reported information.

To get pre-approved, you’ll need to provide documentation like:

  • W-2s from the past 2 years

  • 3 months of pay stubs

  • Bank statements (past 3 months)

  • Previous 2 years of tax returns

  • A list of debts and assets

  • Divorce decree (if applicable)

  • Additional income documentation (alimony, bonuses, etc.)

Once you’re pre-approved, you’ll receive a letter confirming your buying power — a must-have when making offers in today’s competitive market.

How to Keep Your Approval Safe

Lenders recommend not making any big financial changes during this time. To protect your approval:

  • Don’t apply for new credit cards or loans

  • Don’t buy a car or furniture

  • Avoid job changes if possible

  • Continue paying all bills on time

What Kind of Income Qualifies?

To count toward your loan approval, income must be verifiable, stable, and likely to continue.

Examples of qualifying income include:

  • W-2 income/salary

  • Second or part-time jobs

  • Bonuses/overtime (if consistent)

  • Self-employed income (with documentation)

  • Alimony and child support

Not qualifying:

  • Lottery or gambling winnings

  • Unemployment pay

  • One-time bonuses

  • Rental income (unless proven with history)

  • Unverifiable side jobs or cash income

Why the Right Lender Matters

We work with trusted lenders and are happy to make recommendations. Remember you’ll be in close contact with your lender throughout the process. It’s important to feel comfortable with them, and to make sure they answer all your questions with clarity and care.

From Pre-Approval to Closing: What to Expect

Here’s a simplified timeline of what happens after you’re pre-approved:

1. Home Shopping & Offer

With your pre-approval in hand, you and your agent (like us!) can confidently begin touring homes within your price range. Once you find the right one, we’ll help you submit a strong offer.

2. Offer Accepted → Escrow Begins

Once the seller accepts your offer, you’ll enter the escrow process. This is when the home goes “under contract,” and you begin working toward closing.

3. Inspection Period

You’ll schedule a home inspection to evaluate the property's condition. If any major issues are discovered, we may renegotiate terms or ask for repairs.

4. Appraisal

Your lender will order an appraisal to verify the home’s value. If the home appraises below the purchase price, you may need to renegotiate, pay the difference, or walk away — depending on the contract terms.

5. Underwriting

During underwriting, the lender will do a deep review of your financial profile. They may ask for updated bank statements, letters of explanation, or additional documents. This step can be nerve-wracking, but we’ll guide you through it.

Heads-Up:

Delays often happen during underwriting. Common causes include:

  • Missing documentation

  • Employment verification issues

  • Credit activity during the process (don’t open new credit cards or make big purchases!)

  • Changes in income or job status

Need Help Starting the Process?

We’re here to help guide you from pre-approval to move-in day. Reach out to us with any questions or to get connected with a great local lender. Contac Us

Author: Delcor International Realty | Last updated: May 02, 2025

Houston Texas