How Far in Advance Do You Need to Apply for a Home Loan?

Getting approved for a mortgage can be a nerve-wracking process.

Getting approved for a mortgage can be a nerve-wracking process.

Sharing the apartment that used to be just for you isn't easy, and you know it's time to move when you stuff is bursting out of the closets. To make the transition from renting to owning, you'll need to pull together a joint financial profile that encourages a mortgage lender to take a chance on you. Although there's no set amount of time in advance needed to apply for a loan, the sooner you apply, the sooner you'll be able to purchase a larger living space and move.


Most real estate agents require you to provide proof of home loan pre-approval, or pre-qualification at the very least, before showing you homes. To get pre-approved, contact your lender as soon as you have the desire to browse, no matter how far in the future you actually plan to buy a house. A pre-approval -- based on your credit reports and verified employment, income, tax returns and down payment availability – tells you how much home you can afford and says to your agent and home sellers that they can expect the deal to close when you enter into a sales contract. Although less concrete than a pre-approval, agents and sellers also accept loan pre-qualifications -- based on a preliminary review of your credit scores and self-reported income and assets -- as proof that you'll be able to close on a sale. Pre-approval and pre-qualification letters have expiration dates, which vary among lenders, and your loan officer can update your file and provide such letters on the spot as needed.

Price Negotiations

Concentrate your home search in your price range to avoid disappointment. When you find a home you wish to buy, request a pre-approval letter that states the exact amount you plan to offer rather than the total amount for which you qualify. A pre-approval letter on your lender's letterhead stating the offering price can be a powerful bargaining chip when negotiating a sales contract.

Loan Underwriting

Although you can gain loan pre-approval at any time before you find a house, the actual loan approval process, also called the underwriting process, begins once you provide your lender with a ratified sales contract, meaning a contract signed by you and the seller agreeing to price and terms. Your lender will let you know how fast her company can complete the underwriting process, and some lending institutions work faster than others. During this process, the lender confirms the truthfulness of your financial information. Lenders also require a successful appraisal, a clean title and other items determined by the type of loan for which you apply.


If you are concerned about your ability to qualify for a loan, ask you lender for a checklist that specifies the items necessary for loan approval. Some of the items needed may take up to two years to satisfy, such as increasing your income, raising a down payment or gaining distance from credit report blemishes. If you plan to liquidate assets to raise money for a home loan down payment, the amount of time it takes to sell them may influence when you apply for your home loan.


About the Author

Maya Black has been covering business, food, travel, cultural topics and decorating since 1992. She has bachelor's degree in art and a master's degree in cultural studies from University of Texas, a culinary arts certificate and a real estate license. Her articles appear in magazines such as Virginia Living and Albemarle.

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