Get the letter right before you make the offer
Reading a preapproval letter line by line
Desk answer
A preapproval letter names the borrowers, a maximum loan or purchase amount, the loan type, an issue date and an expiry, and a list of conditions. It is not a loan offer, a locked rate or a commitment. A commitment letter comes later, after underwriting, and is still conditional until closing.
Last reviewed against the primary sources listed below.
Parts of a typical letter
- Borrower names and the lender's contact.
- Loan type and maximum amount.
- Issue date and how long it is valid.
- Conditions: appraisal, title, no material change in income, credit or assets.
What it is not
- Not a rate lock.
- Not a Loan Estimate. That comes within three business days of a full application, as the CFPB explains.
- Not a commitment. A commitment letter follows underwriting.
Can you make an offer with it?
Yes. Most agents ask for a letter with the offer, and some sellers will not consider an offer without one.
Questions buyers bring to the desk
Can you make an offer on a house with a preapproval letter?
Yes. A preapproval letter is commonly submitted with an offer to show the seller that a lender has reviewed your finances.
Does a mortgage commitment letter mean you are approved?
It means underwriting has approved the loan subject to listed conditions. It becomes final only once those conditions are met and the loan closes.
What is the average time to get a mortgage commitment?
It varies by lender, loan type and how quickly documents and the appraisal come in. Ask your lender for their typical timeline in writing.