5 Things You Need For a Mortgage Pre-Approval


When you’re looking to buy a house, you may be tempted to base your searches on features you’ve always wanted for your own home. But this approach to home shopping can be rather disappointing when you come to realize that the house you’re considering is off your budget. A much better way to go about home shopping is to first get an estimate of the mortgage amount you’ll be able to spend on your purchase, and base your search on that.

To know your estimated loan amount, you need to get a pre-approval from a lender which is based on multiple important factors related to your finances. Here are the 5 things that you’ll need to produce to your lender for mortgage pre-approval.

Proof of Assets

You will need to show your asset statements to lenders by producing documents such as checking and saving account statements, brokerage statements, W-2, and retirement accounts to get a mortgage pre-approval. Asset statement documents enable lenders to identify whether you will be burdened with the mortgage amount you’ll have to pay back. These documents provide a comprehensive look of your finances and serve as proof that you have enough funds for a down payment and closing cost required for a mortgage.

If you can’t afford to pay down at least 20% of the mortgage amount, you may have to buy a PMI (Private mortgage insurance). You can calculate the cost of a PMI using a conventional loan calculator with PMI.

Employment Verification

Lenders will need to verify your employment status and salary by calling your employer for a confirmation. If you are self-employed, you will need to provide additional information or documents that prove the stability of your income, the location and type of your business, financial strength of the business, and the income generating capacity of the business to create consistent cash flow sufficient to pay for monthly payments. You can work out your monthly payment using a monthly mortgage payments calculator.

Proof of Income

For lenders, it’s very important to have the assurance that a homebuyer has a stable income source to pay off a mortgage. As a result they will require you to produce multiple documents pertaining to your income including W-2 wage statement and tax returns from the past two years, year-to-date income, current pay stubs, and additional documents that serve as a proof of income such as alimony or bonuses. By analyzing these documents they can identify if you’re a high or low risk borrower.

Credit Score

Credit score represents a homebuyer’s ability to manage their finances including spendings and credits. Based on that logic, lenders see potential homebuyers with good credit scores as having low risk and those with bad credit scores as high risk. Generally, lenders require a FICO score of at 620 to approve a conventional mortgage and 580 for a Federal Housing Administration (FHA) loan. Credit score also contributes in determining the interest rates. Lenders usually reserve the lowest interest rates for borrowers with a credit score of 760 or higher.

Other Documents

Lenders will also require you to produce personal documents for proof of identification including a driver’s license and a social security number. They may also ask for authorization to pull a credit report.


Once you’ve submitted a mortgage application for pre-approval, your lender is required to provide a document called a loan estimate within three business days. The loan estimate contains important information pertaining to the mortgage including pre-approved loan amount and maximum loan amount, terms and type, interest rate, estimated interest and payments, estimated closing costs, estimate of property taxes, and homeowner’s insurance. You can even use a conventional loan approval calculator to work out a rough estimate. After you have all this information, you can start shopping for a home with a clear idea of the types of homes you afford.

If you wish to know more about mortgage amounts and other costs involved, you can simply calculate them using Miller Mortgage’s loan calculator.

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