What is a Pre Approved Mortgage? Definition and Overview


A pre-approved mortgage is a provisional guarantee from a bank to a potential borrower.

It specifies the size of the mortgage that the bank is prepared to offer the borrower in the event that the bank’s conditions are satisfactorily met by the borrower during the actual application process. 

Because a pre-approved mortgage is based on verified documentation provided to the bank by the borrower, the offer is generally more legitimate and dependable than pre-approval offers from credit card companies and other lenders.



Not Guaranteed

Real estate agents and independent sellers are likely to take buyers with a pre-approved mortgage more seriously.

However, a pre-approved mortgage is not a full guarantee or legally binding agreement.

The bank can still decide during the application process to deny credit, or offer credit with different terms. 

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Pre-Approved Mortgage Process

Here is a common example of a pre-approved mortgage process:

  • A couple makes a pre-approval appointment with a bank
  • Before the meeting, the couple gather all necessary documentation, including proof of identity, proof of earnings, proof of assets, and a good credit score
  • After carefully reviewing the documentation and determining the couple to be credit-worthy, the bank makes an offer of pre-approval, which is often accompanied by a letter of pre-approval
  • The couple then looks for a home based on the size of the pre-approved mortgage
  • Upon finding the house they want, the couple gives all the relevant details to the bank, and applies for an actual mortgage
  • The application process is accelerated by the fact that the couple has been pre-approved
  • The bank determines the couple to be credit-worthy and approves the mortgage at a specified amount


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