How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (2024)

By Bill Lyons | Published on August 30, 2023

TABLE OF CONTENTS

    Getting pre-approved is the first step to homeownership. A pre-approval letter demonstrates that you qualify for a home loan and the total loan amount a lender might be willing to offer.

    A mortgage pre-approval doesn’t guarantee you’ll receive the same amount during final approval. However, it can help your offer look more appealing to sellers, showing them that you’re a serious buyer who can afford to purchase their home.

    Learning how to increase your mortgage pre-approval amount can give you more purchasing and negotiating power when hunting for a house. Keep reading to learn more about mortgage pre-approvals and how to increase your amount to help your offer get accepted.

    KEY TAKEAWAYS

    • A mortgage pre-approval can help you learn how much you might be eligible to borrow when you apply for final loan approval.
    • Mortgage pre-approval letters give you more purchasing and negotiating power by making you look like a more serious and qualified buyer to sellers.
    • Increasing your credit score, making a larger down payment, reducing debt, getting a cosigner or co-borrower, and applying for a longer term can help you increase your pre-approval amount.

    What Is a Mortgage Pre-Approval?

    A mortgage pre-approval is an initial evaluation of your financial situation and can help you learn how to get approved for a home loan. Lenders conduct mortgage pre-approvals to help you understand the maximum loan amount you may be eligible for based on your financial information.

    Obtaining a mortgage pre-approval letter is an important step in the home-buying process because it helps you understand your budget. Paired with a proof of funds letter, it can give you even more purchasing power by showing sellers you’re a serious and qualified buyer.

    It’s important to note that the mortgage pre-approval amount and your final approval amount may differ since the final approval amount depends on financial factors and market conditions at the time you apply.

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    What Determines Your Pre-Approval Amount?

    Your mortgage pre-approval amount depends on several financial factors at the time you apply, including:

    • Income
    • Employment history
    • Credit history and score
    • Assets
    • Debt information

    Documents you need for mortgage pre-approval typically include pay stubs, tax returns, bank statements, and W-2s, but your lender may request other documentation to help them get a complete view of your finances.

    After reviewing this information, the lender either approves or denies your application. If you’re approved, you’ll receive a pre-approval letter stating the maximum loan amount you qualify for, which can then be used to help you shop within your budget when house hunting.

    Every borrower is different. For instance, some individuals can get a loan without a job while others can’t, based on other financial factors. Your lender can help you understand how they determined your eligible loan amount and how the different factors influenced them.

    The pre-approval letter is typically valid for only 60 to 90 days and can be used as a negotiating tool when making an offer on a home.

    Ways to Increase Your Mortgage Pre-Approval Amount

    Even though your pre-approval amount doesn’t guarantee you’ll still be eligible for that amount when you complete your final loan application, increasing your pre-approval amount can help your offer get accepted and potentially increase the amount you qualify for later on.

    After getting your pre-approval letter, you might wonder, “How can I increase my mortgage pre-approval?”

    Here are a few ways to increase your mortgage pre-approval amount and make your offer more appealing to sellers:

    Improve Your Credit Score

    Borrowers with higher credit scores get lower interest rates because they’ve demonstrated their ability to pay their debts on time, so lenders don’t have to worry about as much risk as borrowers with low credit scores.

    Since the interest rate can affect your pre-approval amount, your main goal should be to increase your credit score to get the best rate possible. The lower your interest rate, the more you qualify for, so paying your bills on time, not utilizing too much of your available credit (below 30%), and not applying for new credit too frequently can increase your pre-approval amount.

    Increase Your Down Payment

    The more you put down on a home, the less you have to borrow and the more you’ll qualify for. Therefore, if you need a home loan worth a certain amount, you may need to make a higher down payment.

    While some loans, such as USDA and VA loans, allow you to purchase a home with zero money down, it’s usually best to put down as much as possible because it means borrowing less or being able to take out a larger loan. So, if you can, try to put together a good amount of money for a down payment. This may mean taking some time to save up for your down payment or getting gift funds from your parents or a close friend or family member. Note that if you do receive gift funds, you may have to submit a gift letter or letter of explanation to your lender.

    Reduce Your Debt-To-Income Ratio

    Lenders like to see borrowers with a DTI of 43% or below because it demonstrates less of your gross monthly income goes toward paying debt obligations. Paying off loans, credit cards, and other forms of debt can immediately lower your DTI ratio and make you look more appealing to lenders, allowing them to extend larger loan amounts.

    Consider a Joint Application

    If your mortgage pre-approval amount comes back lower than you thought it would, applying for a mortgage pre-approval with another borrower could help. If you have a spouse, partner, trusted friend, or family member who is willing to apply for the mortgage with you, their income and credit score will be considered along with yours, allowing you to get a larger loan amount.

    Of course, this can also have the opposite effect if your cosigner or co-borrower has a low credit score.

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    Apply for a Longer Loan Term

    The longer your loan term, the lower your monthly mortgage payments. With lower monthly payments, you can afford to pay more by spreading out the payments, which increases the mortgage pre-approval amount.

    While many borrowers opt for 15 to 30-year loan terms, you can make your monthly payment even smaller by choosing a 40-year mortgage. Although you’ll build equity more slowly with a 40-year mortgage, this type of loan can help make homeownership more affordable.

    Shop Around for Lenders

    It’s recommended to apply for mortgage pre-approval with at least three lenders to compare their terms and find the one with the best rates and highest pre-approval amount. You should apply with those lenders within the same 45-day period to prevent multiple hard credit inquiries from affecting your credit score too much.

    You may see a temporary dip in your credit score after applying for pre-approval, but regular on-time bill payments should bring your score back up over time.

    See if You Qualify for Other Loans

    A traditional mortgage is the most common way to finance a home, but other types of loan programs can help you buy a house and potentially qualify for a higher pre-approval amount. Some other loan options include:

    • FHA loans: FHA loans allow you to qualify for a home loan with a down payment as low as 3.5% and have more flexible credit requirements.
    • VA loans: VA loans allow eligible active duty service members, veterans, and surviving spouses to qualify for 100% financing with flexible credit requirements.
    • Home equity loans: If you already own a home, a home equity loan (HELOAN) can help you tap into your existing equity and use it for other investments like purchasing another property.

    How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (6)

    Apply for a Mortgage Pre-Approval with Griffin Funding

    Getting mortgage pre-approval can increase your negotiating power when shopping for your dream home. It will also help you remain on budget and set expectations early on by knowing what you can afford.

    While learning how to increase your mortgage pre-approval amount can help you potentially qualify for a larger loan, there are many factors that can affect final approval and your final loan amount. Find out how much you might be eligible to borrow by applying for mortgage pre-approval with Griffin Funding.

    See if you qualify for one of our non-traditional mortgages.

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    Frequently Asked Questions

    How does a pre-approval affect my credit score? How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (7)

    A mortgage pre-approval involves a lender checking your credit history and pulling your credit report, which is typically a hard inquiry. A single hard inquiry or multiple hard inquiries made within the same timeframe will have a minor and temporary impact on your credit score, decreasing it by a few points. However, regular monthly bill payments can bring that score back up.

    How long does a mortgage pre-approval last? How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (8)

    A mortgage pre-approval lasts for 60 to 90 days. After this period, the lender may require you to update your financial information and reapply for a new pre-approval letter.

    What documents do I need for a mortgage pre-approval? How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (9)

    The types of documents a lender needs may vary by loan. However, common documents your lender may ask for when you apply for mortgage pre-approval include the following:

    • Social security card
    • ID
    • Pay stubs
    • Bank statements
    • Tax returns
    • Investment and retirement account statements
    • Gift letters

    Can the pre-approval amount change after it has been issued? How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (10)

    Yes, the mortgage amount can change after it has been issued because mortgage rates fluctuate. When you apply for pre-approval, you'll have the opportunity to lock in your rate. If you don't lock in your rate, you'll have a floating interest rate, which means it can fluctuate depending on current market conditions.

    Then, when you apply for final mortgage approval, your final amount may be different from your pre-approved amount because of this rate change. In addition, your final loan amount can change based on your personal financial circ*mstances, like a decrease in income or an increase in debts.

    How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (11)

    Bill Lyons

    How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (15)

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.

    How to Increase Your Mortgage Pre-Approval Amount | Griffin Funding (2024)

    FAQs

    Can I increase my pre-approval amount? ›

    If you make a 20% down payment, you can considerably increase your preapproved amount because a down payment of 20% or more will eliminate the need for mortgage insurance. Without mortgage insurance holding you back, you can allocate more of your income directly toward the loan's principal and interest.

    How do you get prequalified for more money? ›

    You can take various steps to increase your preapproval amount. These include making a higher down payment, getting a longer loan term, finding a co-signer and, perhaps, becoming preapproved by multiple lenders. It's also best to start the home buying process in a position of financial strength.

    Can you increase loan amount after approval? ›

    You can't increase your loan amount, but you may be able to apply for a second loan. Technically, there's no limit to how many personal loans you can have. Lenders may approve a second or third loan if the borrower has paid off part of the first loan and has a history of on-time repayment.

    How can I increase the amount I can borrow for a mortgage? ›

    Pay off debts

    When assessing your mortgage application lenders look at how much money you owe already. In general, the more debt you have, the less you'll be able to borrow. If you have savings use them to pay off existing debts.

    How do you get pre-approved for higher? ›

    Tips To Increase Your Preapproval Amount
    1. Save more money for a larger down payment. ...
    2. Pay off as much of your existing debt as possible. ...
    3. Improve your credit score. ...
    4. Increase your income. ...
    5. Shop around for a lower mortgage rate. ...
    6. Consider finding a co-signer. ...
    7. Seek out longer loan terms. ...
    8. Set a realistic budget.

    Can I buy a house more expensive than my pre approval? ›

    If you have more than the required down payment, you could get a more expensive house, by paying it down so that the balance is less than your pre approval, or (as per your question) reduce your loan amount in order to save on the interest.

    Can you ask for a higher pre-approval? ›

    There are many different ways you can try to increase your mortgage preapproval amount. Some common ways to do this include improving your credit score, paying off debt, obtaining a longer loan term and boosting your income.

    How do I get the highest preapproval? ›

    The best way to get preapproved for a large amount is to have strong credit, little or no debt and high, steady income. People with lower credit scores, limited or uneven income or high debt levels will see lower preapproval amounts.

    How do banks determine pre-approval amounts? ›

    During the mortgage preapproval process, lenders like Rocket Mortgage® look at your income, assets and credit score. This information determines what loans you could be approved for, how much you can borrow and what your interest rate might be.

    Can you increase your mortgage amount? ›

    You can apply to add on up to your original mortgage amount with minimal costs. Your mortgage specialist would be happy to explain this in detail to you.

    Can we increase loan amount? ›

    If there is a top-up option available with your lender then your need for an increase on the personal loan amount is addressed right away. However, the decision to increase the amount of your current personal loan may negatively impact your credit rating. Discuss this with your lender before applying.

    How to increase mortgage pre-approval amount? ›

    Increasing your credit score, making a larger down payment, reducing debt, getting a cosigner or co-borrower, and applying for a longer term can help you increase your pre-approval amount.

    How to increase borrowing amount? ›

    If your borrowing capacity is lower than you'd like, here are eight things you can do to try and improve it.
    1. Know your credit score. ...
    2. Increase your income. ...
    3. Reduce your expenses. ...
    4. Reduce your debts. ...
    5. Reduce your excess credit limits. ...
    6. Save more money for your deposit. ...
    7. Choose a longer mortgage term.

    Can you ask for more money on a mortgage? ›

    If your home has increased in value since you bought it, you could borrow a further advance from your mortgage lender. There are reasons why this might be a good idea, but you should find out what it could mean for your repayments.

    How do I get preapproved for a credit limit increase? ›

    If you demonstrate a history of on time payments in particular ensuring you make at least your minimum monthly payment on time by the due date, your credit card provider might pre-approve you for a higher credit limit. When a lender extends additional credit through a pre-approval, there's usually no hard credit check.

    Can you update a preapproval? ›

    Pre-approval is typically valid for 3-6 months, but it will vary between lenders. Ideally, if you want to move on with a different lender, you'll make the switch before you've got serious about a property. You can typically extend your pre-approval by simply ringing up your bank or mortgage broker.

    Is it OK to get multiple pre approvals? ›

    The answer is yes!

    You can have multiple pre-approvals at the same time, in fact it's often a smart move. There is technically no limit on the number of pre-approvals you can get which makes shopping around with different lenders a no-brainer.

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