How To Get Pre-Approved As A First Time Home Buyer
How To Get Pre-Approved As A First Time Home Buyer
Buying a home is one of the biggest financial decisions most people will make in their lifetime — and for a First-Time Buyer, the process can feel overwhelming. One of the most critical steps in the home buying journey is understanding how to get pre-approved. In fact, getting pre-approved can be the difference between confidently making an offer and missing out on your dream home.
In this guide, we'll break down how to get pre-approved as a first time home buyer, explain why it matters, what lenders look for, and how to boost your chances — especially if you're buying a home with less-than-perfect credit. Let’s dive in.
What Does It Mean To Get Pre-Approved?
Pre-approval is a lender’s way of saying, “We’ve looked at your finances, and we’re willing to lend you up to X amount to buy a home.” It’s not a final loan offer, but it's a strong indication of your buying power. When you're buying a home, sellers and real estate agents take you more seriously when you're pre-approved.
According to a 2023 report by the National Association of Realtors (NAR), 86% of home buyers who financed their home got pre-approved before house hunting — showing just how important this step is (NAR Profile of Home Buyers and Sellers).
Why Pre-Approval Matters for First-Time Buyers
If you’re a First-Time Buyer, here’s why pre-approval is a game changer:
-
Sets a Realistic Budget: You’ll know exactly what you can afford.
-
Shows Sellers You're Serious: Offers with pre-approval are more attractive.
-
Saves Time: You won’t waste energy on homes outside your price range.
-
Identifies Credit or Financial Issues Early: If there’s a problem, you can fix it before you’re under contract.
Step-By-Step: How To Get Pre-Approved As A First Time Home Buyer
Step 1: Know What Lenders Look For
To get pre-approved, lenders will review your:
-
Credit score
-
Debt-to-income ratio (DTI)
-
Employment history
-
Income
-
Assets and savings
-
Tax returns and bank statements
Tip: Aim for a DTI under 43% — but some lenders allow higher for FHA loans.
Stat: The average credit score for approved mortgage applicants in 2023 was around 735, but FHA loans may accept scores as low as 580, and sometimes even 500 with larger down payments (Experian).
Step 2: Gather Your Documents
Before applying, collect the following:
-
W-2s or 1099s from the past 2 years
-
Recent pay stubs
-
Last 2–3 months of bank statements
-
Tax returns (2 years)
-
Valid ID
-
List of monthly debts
Being organized can speed up your pre-approval.
Step 3: Check and Improve Your Credit (If Needed)
As a First-Time Buyer, you might not have perfect credit — and that’s okay. But better credit = better interest rates and loan options.
Quick Fixes To Boost Credit:
-
Pay down credit card balances
-
Dispute inaccurate credit report items
-
Don’t open new credit lines during the pre-approval process
-
Make all payments on time
Fact: Just a 20-point increase in your credit score could save you thousands over the life of your loan due to better interest rates.
Step 4: Choose the Right Lender
Not all lenders are the same — some specialize in first-time home buyers, low-credit borrowers, or government-backed loans like FHA, VA, or USDA. Shop around and compare:
-
Interest rates
-
Loan types
-
Fees and closing costs
-
Customer reviews
You can get pre-approved by banks, credit unions, online lenders, or mortgage brokers.
Step 5: Submit a Pre-Approval Application
Once you're ready, fill out the application with your chosen lender. This will involve a hard credit check, so try to do all applications within a 14-45 day window to minimize impact on your credit score.
Lenders will typically respond with a pre-approval letter stating:
-
How much you can borrow
-
Loan type
-
Interest rate (estimated)
-
Down payment requirement
-
Expiration date (usually 60–90 days)
How To Get Pre-Approved With Bad Credit
Many First-Time Buyers ask, “Can I get pre-approved with bad credit?” The answer is yes — especially with FHA loans, which require as little as 3.5% down.
Tips for Getting Pre-Approved With Bad Credit:
-
Work with a lender familiar with credit-challenged buyers
-
Consider a co-signer
-
Explore down payment assistance programs in your area
-
Ask about FHA, VA, or USDA loans
Example: A buyer with a 580 credit score might qualify for an FHA loan with 3.5% down — that’s just $7,000 on a $200,000 home.
Mistakes First-Time Buyers Make During Pre-Approval
Avoid these common pitfalls:
❌ Making large purchases
❌ Opening or closing credit accounts
❌ Switching jobs
❌ Not being honest about finances
❌ Skipping the credit check before applying
How Long Does Pre-Approval Last?
Most pre-approvals are valid for 60 to 90 days, depending on the lender. If your letter expires, you may need to reapply with updated documentation.
Final Thoughts: How To Get Pre-Approved As A First Time Home Buyer
Getting pre-approved is the first major milestone in your homeownership journey. It puts you in a stronger position to make offers, shows sellers you're serious, and helps you understand your financial situation better. Whether you're worried about your credit or just starting out, knowing how to get pre-approved as a first time home buyer empowers you to take control of the process.
If you're a First-Time Buyer looking to navigate the pre-approval process with confidence, reach out today. I specialize in helping buyers just like you — even if your credit needs a little TLC — get across the finish line and into your first home. CONTACT
Resources & References
Recent Posts
