What it is
A pre-approval is a lender's written estimate after reviewing your credit, income, assets and debts. It states the loan amount and type you can likely receive, subject to the property appraisal, underwriting and conditions.
It is stronger than a prequalification, which is a quick estimate based on self-reported information.
Why it matters
Sellers and agents take offers with a pre-approval more seriously. It also gives you a realistic budget and shows problems with your credit or documents early, while you can still fix them.
Cash buyers use proof of funds in the same way.
Documents you will need
Typically ID, bank and investment statements, pay stubs or business income records, tax returns and a list of debts. Foreign buyers may need additional documents, such as foreign credit reports, translations or proof of income from abroad.
Lenders may ask to explain large deposits, so keep records of the source.
How long it lasts
Letters are usually valid for a limited time, often sixty to ninety days, after which the lender updates the information. Changes in your finances can change the result.
Do not open new credit, change jobs or move large sums without telling the lender.
Compare lenders
Ask for loan estimates from several lenders and compare rate, points, fees and monthly payments. Multiple inquiries made close together are usually treated as one for credit scoring purposes, but confirm this with the lender.
Choose a lender that can close on time and has experience with your situation.
What it does not guarantee
A pre-approval can be withdrawn if the property fails appraisal or underwriting, if your finances change or if the building does not meet the lender's condo rules.
This is why a financing contingency in your contract matters.
Common mistakes
Shopping for homes without a pre-approval, borrowing the maximum amount, ignoring insurance and association costs, changing finances before closing and trusting a verbal estimate.
Another mistake is not telling the lender about the property type, since condos have additional approval rules.
Checklist
Gather your documents. Ask two or three lenders for estimates. Choose a payment you are comfortable with, not the maximum. Keep your finances stable until closing. Give the letter to your agent with each offer.
Next step
We can introduce you to lenders with experience in foreign-buyer and condo financing. Lidiya Tretyak is a licensed Florida real estate agent with Douglas Elliman and speaks English, Russian and Ukrainian; the first consultation is free.
This guide is general information, not legal or tax advice. Laws and programs change — confirm details with a Florida attorney and a US tax professional.
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