How to increase your mortgage preapproval amount

Mortgage preapproval estimates how much your lender expects you to be able to borrow to buy a home. That makes it an important step in deciding how much home you can afford and shows real estate agents and sellers that you’re ready to buy. If your preapproval is less than expected, you can earn more money and pay off your debts to increase it.

What is mortgage preapproval?

Mortgage preapproval is an estimate from a lender of how much you can expect to borrow to buy a home. The lender will review some of your financial documentation, as well as your credit score, and provide a letter stating how much it expects you to qualify to borrow. The letter typically includes an estimated interest rate for your loan as well.

Rocket Mortgage^® provides borrowers with a Verified Preapproval Letter, which is reviewed by an underwriter.

Preapprovals usually are valid for 60 to 90 days, which gives you the chance to shop for a home after you receive your letter. You don’t have to take out your final loan with a lender that preapproved you, though many borrowers do.

Many listing agents require new clients to have preapproval. Sellers also may require bidders to be preapproved to show they’re ready to close the sale.

Mortgage preapproval isn’t the same as a mortgage prequalification, which also estimates how much you can borrow but doesn’t require the lender to verify your finances.

Can I increase my preapproval amount?

8 tips to help you get approved for a higher mortgage loan

If you aren’t satisfied with your initial preapproval amount, you can take steps to possibly unlock a higher mortgage loan amount.

Before you jump into increasing your mortgage loan amount, consider whether you can truly afford the bigger payments. Take the time to realistically assess your budget before attempting to increase your preapproval amount in order to buy a house.

If you decide that a larger preapproval amount is the right move for your finances, you have several ways to give that amount a boost. Consider these actionable steps to get approved for a higher mortgage loan:

1. Improve your credit score

A good first step is to look at your credit report. If you already have a great credit score, you can’t do much to raise it significantly. But if you have a credit score that could stand some improvement, then take action.

When you improve your credit score, a lender may be willing to increase your preapproval amount. Additionally, a higher credit score may be able to lower your interest rate.

2. Generate more income

A bigger income can lead to a larger preapproval amount. That’s because you’ll be able to handle a larger mortgage payment with more money coming in every month.

Of course, generating more income can be easier said than done, so it pays to think through all of your income sources. Chances are that you only included your W-2 income on your application. But you can go back to include other sources of income.

A few easily overlooked sources of income include alimony, child support, disability income, Department of Veterans Affairs (VA) benefits, retirement benefits, side hustles, and bonuses. If your household receives any of these types of income, you may be able to include it on your application.

3. Pay off debts

When determining how much you can borrow, a lender will compare your monthly debt payments to your gross monthly income to determine your debt-to-income ratio (DTI). If you have an extensive monthly debt burden – for example, a high DTI ratio – your preapproval amount will be lower. But if you can eliminate some of these debts – such as credit cards or personal loans – from your books, then a lender may be willing to increase your preapproval amount.

4. Find a different lender

Not all lenders view things in the same way. If a mortgage lender provides a low preapproval amount, then you may decide to fill out another mortgage application with a different lender. In some cases, you may find that switching lenders makes all the difference.

5. Make a down payment of 20%

If you can make a down payment of at least 20% of the total purchase price, you may be approved for a higher loan amount.

That’s because putting down 20% eliminates private mortgage insurance (PMI), which is a cost tacked onto your monthly payments when you take out a conventional loan. The lender may increase your preapproval amount without mortgage insurance added to your monthly mortgage. Keep in mind, that government-backed loans like FHA loans may include mortgage insurance premiums which are cannot be removed with a larger down payment.  

6. Apply for a longer loan term

A home loan with a longer term allows you to stretch out your mortgage balance over more payments. In most cases, a longer term – such as a 30-year fixed-rate mortgage – will calculate into more affordable monthly payments. As a result, a lender may be willing to lend you more if the loan is set for a 30-year versus a 15-year term.

7. Find a co-signer

Closing a mortgage with a co-signer is typically not ideal for the co-signer. Although you’d be living in the house, their assets would be on the line if you couldn’t keep up with your mortgage payments. As such, it can be challenging to find a willing co-signer.

While it may be difficult to lock down a co-signer, if you can recruit a willing family member or friend with a high enough income, then you may be able to give your preapproval amount a boost.

8. Find a more affordable property

Ultimately, you may not be able to increase your mortgage amount. But that doesn’t mean homeownership isn’t in the cards. Instead, you’ll have to start searching for a more affordable property.

If you aren’t sure how much you can afford, consider using a mortgage calculator to see how the numbers work out. You can play around with the options to find the most affordable option for your situation.

If you want to make things even more specific to your situation, check out our home affordability calculator. It will allow you to run the numbers on what home price you can afford right now.

FAQ

Questions about mortgage preapprovals? Here are answers to common queries.

Can I extend my mortgage preapproval?

Mortgage preapproval usually is valid for 60 to 90 days. If you haven’t found a home before this deadline, you can ask your mortgage lender to extend it. You may need to resubmit documents such as recent paycheck stubs or bank account statements. Mortgage interest rates may have changed as well. If rates have risen, you might not qualify for as large a mortgage.

Can switching lenders increase my mortgage preapproval?

Yes, when you shop around with different lenders, you might find one that approves you for a higher loan amount. Just ensure that you can afford the monthly payment that comes with this higher amount, regardless of what the lender says.

The bottom line: Improving your finances will increase your preapproval amount

If you’re not happy with your mortgage preapproval, don’t panic. You can take steps to boost your preapproval amount, including increasing your monthly income, reducing your monthly debts, improving your credit score, and providing a larger down payment. Don’t be afraid to ask more than one lender for a preapproval, too. Different lenders might approve you for differing loan amounts. Just don’t overextend yourself: You don’t want to end up with a monthly mortgage payment that is a struggle for you to afford.

If you’re ready to start shopping for a mortgage, consider applying with Rocket Mortgage today.