First Time Homebuyer: What to Do Before Getting Pre-Approved

Being a first-time homebuyer is exciting—but let’s be real, it can also feel overwhelming. Most people know they’ll eventually need to get “pre-approved” for a mortgage, but what about before that? What steps should you take to make sure you’re actually ready when you sit down with a lender?

If you jump straight into pre-approval without doing the groundwork, you could set yourself up for surprises—like a lower approval amount than you expected, higher interest rates, or even being denied. The truth is, lenders will be looking at your entire financial picture. The stronger you are going in, the better your loan terms and buying power will be.

So, here’s a step-by-step guide on what to do before getting pre-approved.

Step 1: Understand What Pre-Approval Really Means

Before you start, know what pre-approval is. A pre-approval isn’t just a ballpark guess—it’s when a lender actually looks at your credit, income, debt, and financials to give you a conditional “green light” for a mortgage up to a certain amount.

Pre-qualification (which many buyers confuse with pre-approval) is just an estimate based on numbers you give. Pre-approval is the real deal. But in order for that to work in your favor, you need to get your ducks in a row first.

Step 2: Check Your Credit Early

Your credit score plays a huge role in whether you’ll be approved for a loan and what interest rate you’ll get. A difference of even 20–30 points can mean thousands of dollars more—or less—over the life of your loan.

What to do:

• Pull your free credit report from AnnualCreditReport.com (you’re entitled to one from each bureau every year).

• Look for errors—like accounts you don’t recognize, balances that are wrong, or late payments that shouldn’t be there. Dispute anything inaccurate.

• If your score is on the lower side, work on improving it: pay down credit card balances, don’t open new accounts, and make every payment on time.

Step 3: Get a Handle on Your Debt

Lenders don’t just look at your income; they care about your debt-to-income ratio (DTI)—basically how much of your monthly income is already spoken for by debt. If your DTI is too high, you may get denied even if your income is decent.

What to do:

• Add up your monthly debts (car payment, credit cards, student loans, personal loans).

• Divide that number by your monthly gross income. That’s your DTI.

• Aim for a DTI below 36%—lower is better.

If your DTI is high, consider paying off smaller debts or reducing balances before applying for pre-approval.

Step 4: Build a Solid Savings Cushion

Buying a home isn’t just about the down payment. You’ll also need money for closing costs, inspections, moving expenses, and repairs that pop up.

What to do:

• Save at least 3–6 months of living expenses as an emergency fund (lenders like to see this).

• Set aside money for your down payment. FHA loans may allow as little as 3.5%, but conventional loans usually start at 5%–20%.

• Don’t forget about closing costs—these usually run 2%–5% of the purchase price.

Pro tip: Even if you qualify for a low down payment loan, having extra reserves makes you look stronger to lenders.

Step 5: Get Real About Your Budget

It’s easy to start scrolling through Zillow and falling in love with homes before you even know what you can comfortably afford. But what you qualify for and what fits your lifestyle aren’t always the same.

What to do:

• Write out your current monthly expenses—rent, utilities, car, groceries, entertainment.

• Decide what you’re truly comfortable spending on a monthly mortgage. (Don’t just go with the max the bank gives you.)

• Use an online mortgage calculator to estimate what home price aligns with your ideal monthly payment.

This helps you avoid “house poor” syndrome, where you qualify for a big loan but have no money left to enjoy life.

Step 6: Organize Your Paperwork

When you go for pre-approval, lenders are going to ask for a ton of documents. If you’re scrambling to find everything, it slows the process down.

What to gather ahead of time:

• Last 2 years of W-2s or 1099s

• Last 2 years of tax returns

• Most recent pay stubs (covering 30 days)

• Bank statements (last 2–3 months)

• Retirement or investment account statements

• ID and Social Security card

Having these ready shows you’re prepared and serious, and it can speed up your pre-approval.

Step 7: Avoid Big Financial Changes

When you’re gearing up for pre-approval, consistency is key. Lenders want to see steady income, stable employment, and reliable credit behavior.

Avoid these moves before pre-approval:

• Don’t open new credit cards or take out loans.

• Don’t quit your job or switch careers (unless it’s unavoidable).

• Don’t make large unexplained deposits or withdrawals from your accounts.

• Don’t co-sign loans for anyone else.

Even small changes can raise red flags and cause delays.

Step 8: Research Loan Programs

Not all mortgages are created equal, and the “best” loan depends on your situation. First-time buyers often qualify for programs that can save money.

Look into:

• FHA loans: Low down payment, flexible credit requirements.

• Conventional loans: Stricter credit, but better long-term if you can put more down.

• VA loans: For veterans and service members, often with no down payment.

• USDA loans: For rural areas, with no down payment.

• First-time buyer grants: Many states and cities offer down payment or closing cost assistance.

Knowing what’s out there can help you ask smarter questions when you meet with a lender.

Step 9: Learn About Your Market

It’s not just about your finances—understanding your local housing market matters too. Are homes selling above asking? How competitive is it?

What to do:

• Browse listings in your target neighborhoods.

• Track how long homes stay on the market.

• Look at average prices and compare them to your budget.

• Talk to a local real estate agent who knows the area well.

This will give you a realistic picture of what you can expect when you start house hunting.

Step 10: Choose the Right Lender & Agent

Finally, before you officially get pre-approved, it’s smart to start researching lenders and agents.

For lenders: Compare at least 2–3. Look at their rates, fees, communication style, and online reviews.

For agents: Find someone who listens to your needs, knows first-time buyer programs, and understands your local market.

This team will guide you through the whole process—so choosing the right fit matters.

Final Thoughts

Getting pre-approved is an important milestone, but it’s not the first step in the home-buying journey. The more prepared you are going in, the smoother everything will go—and the better your chances of landing the home you love.

By checking your credit, managing your debt, saving up, organizing documents, and researching your options, you’ll walk into pre-approval confident and ready. Remember: buying a home isn’t just about what the bank says you can afford—it’s about building a foundation for your financial future.

Do the work before you sit down with a lender, and you’ll be ahead of the game.