How to Get a Pre-Approval for a Conventional Loan

The Quick Read: A pre-approval is a lender’s written statement, based on verified documents, that you are likely to be able to borrow up to a stated amount. You get one by pulling your credit, gathering income and asset records, and letting a lender run the file through automated underwriting. It is not a guaranteed loan. The appraisal, title work and a clean file through closing still decide the outcome.

What Is a Conventional Pre-Approval?

A pre-approval is a lender’s tentative commitment to lend up to a certain amount. The Consumer Financial Protection Bureau describes it as based on assumptions, not a guaranteed offer. It tells a seller you can probably get financing.

A conventional loan is a conforming mortgage that follows Fannie Mae or Freddie Mac standards. Those two agencies buy loans that lenders originate. They do not make the loans themselves. Lendmire’s conventional loan programs are arranged through wholesale lenders, and Lendmire is a broker, not the lender.

Here’s where borrowers get tripped up: the labels. Some lenders say “prequalification” for a quick estimate built on numbers you typed in. Others use “pre-approval” for a file where documents were actually verified. The label matters less than what was reviewed. Ask directly.

How Is a Conventional Loan Underwritten, Step by Step?

Underwriting runs in five steps: gather documents, pull credit, run automated underwriting, issue the letter, then do full underwriting once you have a contract. Each step has its own failure points, and most of them are documentation gaps, not credit problems.

Step 1: Gather documents. The CFPB’s application packet guidance lists the core items: a pay stub covering the last 30 days, W-2s for two years, signed federal tax returns for two years, and the two most recent bank statements. Add photo ID and a Social Security number. If part of your down payment is a gift, the giver signs a statement saying so. Self-employed borrowers and anyone with irregular income should expect to supply more.

Step 2: Credit pull. The lender orders a merged credit report and pulls scores. Across the wholesale programs Lendmire places files with, the conventional lane starts at a 620 decision score, and some lenders set a higher floor. An adjustable rate under manual underwriting starts at 640. Subject to lender guidelines, the automated finding governs most files.

Step 3: Automated underwriting. The lender runs your file through Desktop Underwriter or Loan Product Advisor. Fannie Mae’s Selling Guide says the assessment covers equity investment, credit history, liquid reserves and reliable recurring income. The automated finding sets the total debt-to-income ceiling at 50% on most files. Manually underwritten loans run at 36%, or up to 45% with the reserve and score factors in the agency’s Eligibility Matrix.

Step 4: The letter. The letter states a maximum amount based on the verified file. It is conditional on the property, the appraisal and no adverse changes.

Step 5: Contract, then full underwriting. Appraisal and title work start only after you have a property under contract. You then receive a Loan Estimate and the file goes through final underwriting.

What Does a Pre-Approval Letter Actually Contain?

The letter states a maximum loan amount, the loan type, and the conditions attached. That is the part to read closely. Terms such as an estimated payment or rate, where a lender includes them, are estimates, not commitments. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.

Check three things when the letter arrives:

• The amount. It is a ceiling, not a target.
• The conditions. Satisfactory appraisal, clear title, no new debt, unchanged income.
• The expiration. The CFPB says a letter can carry an expiration date. Lenders set their own windows, so read yours.

Documents go stale too. If closing drags, income and asset records may need refreshing even if the letter is still valid.

How Much Down Payment Does a Conventional Pre-Approval Assume?

Less than most buyers expect. For a one-unit principal residence with a fixed rate, the conventional programs allow 97% leverage (3% down) when at least one borrower is a first-time buyer, meaning no ownership interest in a residence in the previous three years. Otherwise the standard purchase leverage is 95%, which is 5% down. Two- to four-unit principal residences also reach 95%. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.

Occupancy changes the answer. Second homes top out at 90%. Investment property runs 85% on one unit and 75% on two to four units. If your purchase involves a rental or second home, the short version is that occupancy decides the leverage, so tell the lender up front.

HomeReady and Home Possible carry an income limit of 80% of area median income. If you are near that line, ask the lender whether you fit.

All of this is subject to lender guidelines and full file review. It is not a commitment to lend.

What Is Mortgage Insurance on a Conventional Loan?

Mortgage insurance is required above 80% loan-to-value. It protects the lender, not you. The mechanics are favorable compared with some other loan types because it can come off.

You may request cancellation once the balance reaches 80% of the original value, provided you have a good payment history, no subordinate liens, and no decline in value. The servicer must terminate it automatically when the balance is scheduled to reach 78%, per the CFPB’s explanation of PMI removal, as long as you are current.

Published typical annual premiums run 0.58% to 1.86% of the balance. That is a range, not a quote. Your actual cost depends on credit, leverage and the lender’s mortgage insurer, and it shows up on your Loan Estimate.

How Do Credit Score and Debt-to-Income Shape the Result?

Credit sets whether the automated system will return an approval and how it weighs the rest of the file. Debt-to-income sets how much loan you can carry. Neither is a single cutoff you pass or fail.

On credit, Fannie Mae announced that its automated system no longer applies a fixed minimum score. It relies on a comprehensive risk analysis instead, per its announcement SEL-2025-09. That does not mean low scores get approved. Manual underwriting still uses the Eligibility Matrix floors, and individual lenders add their own standards. A borrower can be declined at one lender and approved at another. Treat “no minimum” as a headline, not a plan.

On debt-to-income, the common “43%” figure is outdated shorthand. The Fannie Mae Selling Guide on debt-to-income ratios sets 36% and 45% for manual underwriting and 50% for automated files. It also says a loan is not eligible for delivery if a recalculated ratio exceeds those limits. That matters between pre-approval and closing, because a new car payment can push a file over the line.

Ratios count the new housing payment plus recurring debts. In some cases an installment loan with only a few payments left may be excluded. Ask the lender how your specific debts are treated.

Waiting periods after credit events are agency rules, not lender preferences: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.

Where the General Rule Breaks

The standard path assumes a W-2 salary, a decent score, a one-unit home and a purchase. Several common situations bend it.

Self-employed or variable income. Expect more documents and a longer review of business history. Freddie Mac’s guide on self-employed income has a dedicated section on stable monthly income for these borrowers. Child support or alimony may not count if payments are inconsistent or may end within three years, per the CFPB’s paperwork guidance.

No credit score. A borrower with no score faces extra conditions. Where co-borrowers have scores, the scored borrowers generally need to carry the larger share of qualifying income. Ask your lender how they treat this.

Non-occupant co-borrower. Someone who will not live in the home can help a file, but the guide lowers the maximum ratio for the occupying borrower on manually underwritten loans.

Loan size. Above the conforming limit, you are in jumbo territory and these agency rules no longer apply. The Federal Housing Finance Agency publishes limits each fall and they vary by county. On the wholesale side, the jumbo lanes start at a 660 decision score.

Cash-out or rate-and-term refinance. Different purpose, different rules. This article covers purchase.

What Sinks a Pre-Approval Before Closing?

Changes. Almost every pre-approval that falls apart does so because the file moved after the letter was issued.

• New credit. A car loan or store card adds debt and triggers another credit look. The CFPB advises against applying for other credit during the process.
• Job or income changes. Switching employers, dropping hours or moving from salary to commission can send the file back through underwriting.
• Unsourced deposits. A large deposit with no paper trail raises questions. Keep statements and explain transfers in writing.
• Mismatched documents. A name spelled differently on a pay stub and a bank statement costs time to reconcile.
• Stale paper. Pay stubs and statements age out. A delayed closing may mean a refresh.

The short version: protect the file as if the letter had not been issued yet.

Does Shopping Lenders Hurt Your Credit?

Not much if you do it in a short window. The CFPB says multiple mortgage credit checks within a 45-day window are recorded as a single inquiry, per its credit-check explainer. The window varies by scoring model, so keep your comparison tight and do it in one stretch.

The payoff is real. The CFPB says buyers can potentially save $600 to $1,200 per year by collecting offers from multiple lenders, per its guidance on comparing Loan Estimates.

One distinction to keep straight: a pre-approval is not a Loan Estimate. To get a Loan Estimate you only need to submit six items: name, income, Social Security number, property address, estimated home value and the loan amount you want, per the CFPB’s application guide. Compare Loan Estimates for cost. Use the pre-approval to show sellers you are ready.

A broker can pull options from several wholesale lenders on one file. That is a different path from visiting lenders one by one, and it can matter if your file has a wrinkle.

How Should You Read the Number?

The maximum approval is not a budget. Debt-to-income counts the new housing payment plus recurring debts, but it leaves out repairs, maintenance and everything else ownership costs. The CFPB’s home loan toolkit makes the same point: costs go beyond the mortgage payment.

Consider a buyer whose approval ceiling sits well above what their monthly budget handles comfortably. The better move is to set a purchase target from actual cash flow, then use the letter as a cap. Pre-approval also verifies funds for the down payment, closing costs and reserves. Reserves are counted in months of the housing payment your assets could cover, and they can improve the automated recommendation. Keep them intact. Spending reserves on furniture before closing is a quiet way to weaken a file.

Appraisal and closing paperwork come later. If a property is appraised, the lender must give you a copy at no additional cost at least three days before closing. You should also receive your Closing Disclosure at least three days before closing.

Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.

Key Terms Defined

Pre-approval: A conditional, document-based statement of the maximum amount a lender is tentatively willing to lend you.

Debt-to-income (DTI): Your monthly debts, including the new housing payment, divided by your stable monthly income.

Loan-to-value (LTV): The loan amount as a percentage of the home’s value or price.

Reserves: Liquid assets, measured in months of housing payments, left after the down payment and closing costs.

Automated underwriting: Software from Fannie Mae or Freddie Mac that gives a risk-based finding on a loan file.

Mortgage insurance: Coverage on loans above 80% LTV that protects the lender and can be cancelled as the balance falls.

Next Step

If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. CFPB – Get a preapproval letter

2. CFPB – Create a loan application packet

3. Fannie Mae’s Selling Guide

4. CFPB’s explanation of PMI removal

5. Fannie Mae SEL-2025-09

6. Fannie Mae Selling Guide – Debt-to-income ratios

7. Freddie Mac Seller/Servicer Guide 5304.1

8. CFPB – Gather and update your paperwork

9. FHFA – Conforming loan limit values

10. CFPB – What happens when a lender checks my credit

11. CFPB – Request and review multiple Loan Estimates

12. CFPB’s application guide

13. CFPB – Your home loan toolkit (PDF)