pre approved

Pre-Approval Letter

shannonjones Buying a Home , California , City of Long Beach , Real Estate Leave a Comment

What is a Pre-Approval Letter?

A pre-approval letter is a document that states the amount a lender thinks you will be able to borrow. It is based on your income, credit profile, and expenses. Lenders will take into consideration how much money you will put down on the house, job history, and debt to income ratio.


debt income scale


Example of a Conservative Debt to Income Ratio:

Your housing payment portion of your income should be 31%. So, if you annual income is $60,000 your monthly gross (money before taxes) income is $5,000. This means your monthly mortgage payment should be no more than $1550.


tax forms

Do Your Homework:

Your lender will want full documentation that shows income verification and assets. Listed below are required documents needed for a pre-approval letter.

  • Tax returns
  • W2 statements
  • Bank statements
  • Employer name and address
  • If you are renting, the name and address of landlord

buying power

Benefits of Pre-Approval Letter:

Once you have established a rapport with a qualified lender, they will continue to guide you through the financial process of securing a home loan. They will advise you on how to handle your money during the home buying process. They will also lock in your interest rates, and explain in detail your loan options.

  • Increase your home buying power
  • You will have completed a credit check
  • Identify any flaws on your credit report and fix them
  • You will have all your mortgage documents in order, and this will expedite your home buying process once you make an offer.

Helpful Hints:

  • Be honest about your finances
  • Know your monthly / annual household budget, this will help determine your comfort level for your monthly mortgage payments.
  • Be sure to include annual property taxes and homeowners insurance in your budget
  • Have an emergency fund set aside to cover at least three months of mortgage payments


american dream house lb with flag


Owning a home is an investment that can be passed on for generations, and now is the time to buy. There are beautiful houses in Long Beach waiting to be your next Dream Home. Let the experts of The Shannon Jones Team help you through this process.

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