What Is Pre-Approval?
If you’re thinking about buying a home, you’ve probably heard the term “pre-approval” — often described as something you should get before you start house hunting.
But what exactly is pre-approval, what does it actually mean, and how does it fit into the buying process?
Here’s a clear, plain-English explanation.
Pre-Approval Explained Simply
Pre-approval is when a lender gives an indicative approval for a home loan up to a certain amount, based on the information you provide.
It’s not a final loan approval, but it does give you a clearer idea of how much a lender may be willing to lend — assuming nothing significant changes.
Think of pre-approval as a planning tool rather than a guarantee.
What Information Is Used for Pre-Approval?
To assess pre-approval, lenders usually look at:
- Your income and employment details
- Your living expenses
- Your existing debts
- Your savings and deposit
- Your credit history
This information helps the lender assess affordability and risk, even before a specific property is involved.
What Pre-Approval Is (and Isn’t)
Pre-approval is:
- An indication of borrowing capacity
- A way to set realistic price expectations
- A helpful step before house hunting
Pre-approval is not:
- A guarantee of final approval
- A commitment to take a loan
- Locked in forever
Final approval still depends on the property, valuation, and your circumstances at the time of purchase.
Why Pre-Approval Can Be Helpful
Pre-approval can give you confidence when you start looking for a property.
It helps you understand your price range, avoid overextending, and move more decisively when you find the right home.
For some buyers, it can also strengthen their position when making an offer — particularly in competitive markets.
How Long Does Pre-Approval Last?
Pre-approvals usually last for a limited period, often a few months.
If your circumstances change — such as your income, expenses, or debts — the pre-approval may need to be reviewed or updated.
This is why timing matters.
Do I Need Pre-Approval Before I Start Looking?
Not always — but it’s often helpful.
Some buyers prefer to speak with a broker early, understand their position, and then apply for pre-approval when the timing is right.
Others seek pre-approval first to give themselves clear boundaries before searching.
There’s no one-size-fits-all approach.
