Four gates from initial inquiry to clear-to-close
Mortgage approval passes through four gates, each requiring lender verification. Pre-qualification is informal; a loan officer estimates qualification based on self-reported income and credit without documentation. This takes hours and requires no commitment.
Pre-approval is formal. The lender verifies income (recent pay stubs, tax returns), employment, assets (bank statements), and credit. The lender issues a pre-approval letter showing the approved loan amount, valid typically for 60-90 days. This demonstrates serious buyer intent and is required before making an offer in competitive markets.
Conditional approval and final underwriting verification
Conditional approval comes after an offer is accepted and appraisal ordered. The loan is conditionally approved pending resolution of specified conditions: appraisal results, homeowners insurance proof, final employment verification, satisfactory title search, or additional documentation. Most loans receive 10-30 conditions requiring responses within 3-7 days.
Clear-to-close (CTC) is the final gate. All conditions are satisfied, appraisal is acceptable, underwriting is complete, and the loan is ready to fund. CTC typically comes 2-3 days before the scheduled closing date, giving time for final walkthrough and closing preparation. Once CTC is issued, the loan is certain unless something dramatically changes (buyer loses job, files bankruptcy, or a major property defect emerges).