3. Get a mortgage preapproval

Contact lenders to get preapproved for a mortgage. It's easy and FREE!

A preapproval is useful in showing you what you can afford, but it's also important because it is required before you can see any homes listed on YELLOW. Sellers have the ability to limit the visits to their home to buyers above a certain preapproval level.

For example, say a seller lists their home for $200,000. They can specify that they only want buyers preapproved for $180,000 or more to visit their home. We will not disclose what you are preapproved for, nor will we specify the minimum level set by the seller.

Having a preapproval helps both the buyer and seller because it prevents wasting time and resources on a home the buyer cannot afford. Plus, it helps keep sellers safe since they are letting people they don’t know into their home.

Getting a preapproval

Most people go to their bank or credit union for a mortgage preapproval since this is easy and familiar. Some professionals recommend shopping around and getting quotes from at least three different lenders, but we think the bank is adequate at least for a preapproval. You will want to shop around when applying for your actual mortgage after your offer is accepted, however.

The loan consultants with the bank have a wealth of information on loan types and will help determine the best loan for you. The preapproval is free and you'll usually hear back within a day.

Nonbank lenders like Quicken Loans are becoming increasingly popular and may be a solid option for you, too. However, they may not provide as much assistance and customer support, though it varies based on the company.

You can get a quick preapproval from an online lender like Rocket Mortgage, but there are mixed reviews on their customer support. They may not be the best choice if you are looking for assistance, but may be a good option for a knowledgeable, experienced buyer.

Here's a look at the top mortgage lenders:

Types of lenders:
  • Financial Institution (Bank, Credit Union, etc.) – Most major and local banks offer mortgage products, and it's always a good idea to check with your current bank or credit union when looking for a lender. Many times they may offer their current customers preferred rates or discounts.
  • Non-bank mortgage lender – If your bank or credit union doesn’t offer you the mortgage product you’re looking for, be sure to search for a non-bank mortgage lender. There are many companies that specialize just in financing for homes, like Quicken Loans or LoanDepot.
  • Mortgage Broker – A broker doesn't work for a particular financing institution. Instead, they work with multiple lenders to find you the best rate or loan product to meet your needs. They will charge a fee that is often rolled into the mortgage.
  • Online Mortgage Broker/Lead Service – There are multiple online services (i.e.,, that don't actually lend money, but will work with multiple financial institutions to help you find the best deal.
Fannie Mae Know Your Options

Links to popular mortgage preapproval providers:
Wells Fargo
Bank of America
US Bank
Quicken Loans - Rocket Mortgage

Preapproval Process

The process for a preapproval is fairly straightforward.

You will submit some basic info about your financial situation and provide supporting documents – but it won’t be nearly as thorough as your actual mortgage application you will apply for once you have found a home.

Documents typically needed for preapproval:
  • Last two years of tax returns
  • Past 2-4 pay check stubs
  • 2-3 months of bank statements showing money for the down payment
  • Previous two years W2’s
  • Photo ID
Nerd Wallet Documents needed for a preapproval
Wells Fargo Home Application Checklist

The lender will review this information and pull your credit before granting your preapproval. This process is generally accomplished in one day (or even the same day) with large lenders, but can take up to two or three days.

A Word of Caution

It may be comforting to get a preapproval, but it doesn’t always mean you will eventually be approved for that mortgage.

Once your offer on a home is accepted, you will officially apply for the mortgage. A mortgage underwriter will have to finalize the mortgage application, which means they need to verify your information, request and review more financial documents, and verify that the property meets certain requirements. This process on average takes about 45 days or longer! It's not uncommon for someone who was preapproved for a mortgage to ultimately be rejected.

Most common causes of mortgage rejection:
  • Borrower’s credit score is too low
  • Borrower has too much debt and not enough income to cover it
  • Borrower has insufficient funds for closing costs, cash reserves, etc.

Here's an article on a preapproval that was later rejected for the mortgage:

Additional Resources

Mortgage Preapproval

Mortgage Basics

Qualifying for a mortgage

Should you use a bank or nonbank?


What can you really afford?


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