3 Things Lenders Look for when Complete a Pre-Approval

Erica Jarboe

The pre-approval process is an eye-opening experience when buying a house. Knowing ahead of time what lenders will look at will help you to be prepared.

1. Income and Employment Documents 

Going into a pre-approval process, having proof of income is vital information for a lender to know. Understanding the employment status of a potential buyer allows a lender to get an understanding of the buyer’s ability to pay a mortgage payment every month.

Examples include: 
  • W-2 
  • 1040 
  • Real Estate Income  
2. Assets and Debts 

In addition to reviewing your income and employment history, lenders will look over your assets that could be converted into cash. Your assets could serve as a blanket to fall back on in case any other sources of your income are cut. In that case, if you can convert your assets into cash, then you can still cover your mortgage payment on time. 

Examples of assets would include:
  • Physical cash  
  • Stocks 
  • CD 
  • Checking/savings account 
  • Bonds 

Similarly, whether it is good or bad debt, lenders need to examine the amount of debt a potential buyer is in. With this information, lenders can evaluate sustainable monthly mortgage payments based on your DTI (Debt-To-Income) ratio. As imaginable, as your DTI increases, your ability to pay your mortgage may be hindered.  

 Examples of debt would include: 
  • Car loans 
  • Student loans 
  • Credit card loans 
  • Store credit  
3. Credit Score 

A credit score is a numeral representation of your predicted credit habits such as the ability to pay your bills and loans back on time. Based on your credit score, lenders can estimate how creditworthy you are. Typically, a good score falls between 670 and 739 while a great score falls between 740 and 800. Anything above 800 is stellar! Therefore, providing your lender with your credit score is an important indicator of your credit behavior 

 Three ways to improve your credit score that you may not know... 
  • Pay Down Revolving Account Balances 
  • Pay Your Bills on Time 
  • Always pay more than the minimum amount required (if you have the means) 

Ultimately, buying a home is a pivotal and life changing event. Therefore, to make the process smoother, it is advised for you to get pre-approved to speed up the process of getting your dream home.  


We focus on every detail to help sell your home. Together we are here for you to make the process of selling a house an enjoyable experience.

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