Conditional approval is a type ofpreliminary approval or 鈥減re-approval鈥?from a lender, indicating that you should be approved for a home loan up to a certain dollar limit. It鈥檚 an important early step in buying a home because it gives you a clear idea of what a lender is willing to give you, and therefore what you can afford.
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What does it mean when your mortgage is conditionally approved?
If your mortgage is conditionally approved, your lender will generally outline the conditions that will need to be met so there are no surprises. Why should I apply for conditional loan approval? If you get conditional approval for a home loan, you show sellers you’re a strong candidate.
What is FHA conditional approval?
However, it is not a guarantee your mortgage will be approved. Instead, it means the lender is willing to loan you a specific amount of money if you can meet certain criteria. For instance, FHA conditional approval may require extra documentation since it is guaranteed by the federal government.
What is the difference between conditional approval and verified approval?
For example, conditional approval for an FHA loan or a VA loan may require you to provide specific documentation as a condition of getting final approval on the mortgage. Verified approval means the underwriter has seen documentation of a borrower鈥檚 credit history, income and assets, and can guarantee that you have the means to buy the home.
What is a letter of conditional loan approval?
When the process is finished, you can get a letter or notice of conditional loan approval. Conditional loan approval on a mortgage makes you a stronger buyer. And it may be a requirement in some situations, like new construction. Even better, getting conditional approval for a home loan doesn’t require much extra work.