Home loan pre-approval is a lender's indication of how much you may borrow before you choose a property. It gives you a working budget for inspections and offers, subject to the lender's conditions and further checks.
Pre-approval commonly lasts around 90 days. Your letter's expiry governs, and the lender still needs to approve the property and the final loan.
What Home Loan Pre-Approval Means
Pre-approval, also called approval in principle, sets a borrowing range based on the financial information assessed so far. It helps you plan a purchase before a particular property is selected.
Once you choose a property, a formal application can receive conditional approval while specified requirements remain outstanding. That property-specific decision is a different checkpoint from setting your initial budget. Lender labels overlap: Westpac also uses conditional approval for pre-approval, so read what the letter actually approves.
For example, a hypothetical buyer receives pre-approval for a $600,000 loan. They still need a deposit and money for purchase costs. The pre-approval alone does not confirm that the lender will fund a $600,000 loan against every property they inspect.
The lender tests repayments against your financial position. Read how home loan serviceability affects the borrowing range, and the separate home loan eligibility requirements before choosing where to apply.
How to Get Pre-Approval
Apply for pre-approval directly with a lender or through a mortgage broker, with documents that support the figures in your application.
- Proof of identity for each applicant.
- Recent payslips for employment income, or tax returns and business records for self-employed income.
- Bank statements showing savings and regular expenses.
- Statements for existing debts, including credit cards and personal loans.
- Details of any property already in mind, if available.
The lender's checklist determines the exact documents. A straightforward application can be assessed within days. Self-employed applicants and complex income arrangements can take longer because the lender needs more supporting information.
- Prepare your financial summary, including the deposit available and the repayment amount your budget can support.
- Select a lender whose criteria fit your circumstances, then submit the application and supporting documents.
- Respond to requests for missing information while the lender assesses your finances and credit history.
- If approved, obtain the written indication with the borrowing amount, conditions and expiry. Record the expiry and confirm which checks remain before making an offer.
A submitted form or a verbal estimate is not the written pre-approval. If documents are missing, supply them before treating the borrowing range as assessed.
How Long Pre-Approval Lasts
Pre-approval commonly lasts around 90 days, although the expiry on your own letter governs. Westpac states a three-month period, with renewal possible after 90 days if your financial position is unchanged. NAB's conditional pre-approval certificate is valid for 90 days.
Before an auction or offer deadline, send the lender or broker your letter and proposed buying timetable. Ask them to arrange an extension or fresh assessment before the existing approval expires. Supply updated income and bank statements, and disclose changes to debts or employment.
Allow time for the lender's decision. A request to extend does not keep an expired letter active. Obtain the renewed written indication and read its conditions before relying on the new borrowing amount.
What Pre-Approval Does Not Guarantee
Pre-approval does not guarantee formal loan approval or funding for a specific property. A valuation below the purchase price can reduce the amount the lender will advance, leaving a larger amount for you to fund.
A change in income or expenses can alter the assessment. Lender policy changes can also change the outcome, even if your own finances stay the same. ANZ explains these limits in its home loan pre-approval guidance.
Each full application can leave a credit enquiry. Several applications close together can affect your credit profile, so choose the lender deliberately instead of lodging applications with several lenders at once.
Before bidding at auction, have your solicitor or conveyancer explain the contract obligations and finance risk. Pre-approval does not add a finance condition to the sale contract.
Pre-Approval vs Pre-Qualification
Pre-qualification is an informal borrowing estimate based on figures you state, without document verification or a credit enquiry. Pre-approval involves a lender's assessment and is more useful when you are preparing to make offers.
| Question | Pre-Qualification | Pre-Approval |
|---|---|---|
| What information supports it? | The income, debts and deposit you state. | The financial information and documents assessed by the lender. |
| Is there a credit enquiry? | No enquiry for an informal estimate. | A credit check can form part of the application. |
| When does it fit? | Early browsing, before you are ready to buy. | Active property searching and preparation for offers. |
| What can you rely on? | An estimate to start planning. | A written borrowing indication with conditions and an expiry, subject to final approval. |
If you are browsing suburbs and still building a deposit, start with an informal estimate. When you are ready to make offers, use pre-approval to establish a lender-assessed budget.
Keep finances stable through to settlement whichever starting point you use. A new debt or a job change can alter the amount you can borrow after either estimate.
Checking Current Lender Detail
Westpac and NAB both explain pre-approval on their own home-loan pages, including the conditions that remain before final approval. Westpac calls its written indication approval in principle. NAB emails a conditional approval certificate when it grants pre-approval.
Use the lender's document checklist to prepare the application. CommBank's home loan application guide separates straightforward applications from those needing more supporting information. Your lender's written decision establishes what it has assessed and what it still requires.
Timing the Application
Apply once you are serious about buying and have a deposit plan, close enough to your property search to use the approval before it expires. Applying months before you can make an offer can leave you needing another assessment.
Tighter lender criteria can reduce the borrowing range. If a job change is planned, discuss it before applying or signing a purchase contract. A change to employment type or income can require a fresh assessment.
After Pre-Approval is Issued
Keep your financial position stable until settlement. Avoid taking on new debts, discuss any proposed job change with your broker or lender and keep supporting documents current.
When you find a property, provide its details and the contract so the lender can begin the property-specific approval steps. The valuation and remaining conditions still need to be satisfied.
For brokers managing active buyers, check which pre-approvals expire within the next eight weeks. Book review calls before they lapse and confirm whether each client needs updated documents or a renewed assessment.
