“Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.
Bankrate is always editorially independent. While we adhere to strict , this post may contain references to products from our partners. Heres an explanation for . Our is to ensure everything we publish is objective, accurate and trustworthy. Bankrate logo.
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve kept this reputation for more than 40 years by making it easier for people to make financial decisions and giving them confidence in what to do next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our content is written by professionals with a lot of experience and is edited by experts in the field to make sure it is fair, correct, and reliable.
Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo.
Buying a home is an exciting yet complicated process. As a homebuyer, you’ll need to navigate through various steps like getting pre-qualified, finding the right home, negotiating an offer, and securing financing before you can call yourself a homeowner.
One of those key steps is going through the mortgage approval process This involves submitting an application and supporting documents so your lender can verify your finances and creditworthiness
If you’ve never bought a house before, you might not understand what “conditional approval” means on your mortgage application. What does this really mean? Are you sure you’ll get the loan, or could you still be turned down?
In this comprehensive guide, I’ll explain everything you need to know about conditional mortgage approvals so you can feel confident as you move forward with your home purchase.
What is a Conditional Mortgage Approval?
A conditional approval means that your mortgage lender wants to approve your loan, but they need some more information or conditions to be met before they can give their full and final approval.
It’s an intermediate step between the initial application review and the final underwriting clearance. The lender has reviewed your application and sees no major red flags, but they require a few more items for verification purposes.
Some common requirements may include:
- Updated bank statements or pay stubs
- A gift letter for any gift funds used for downpayment
- Proof of homeowners insurance
- Explanations for credit inquiries or other application questions
- Appraisal of the property
So in essence, you are conditionally approved assuming you provide the requested items in a timely manner. It’s not guaranteed approval yet, but it’s a positive sign you are on track to get the mortgage.
Is a Conditional Approval a Guarantee?
While a conditional approval is encouraging, it does not 100% guarantee you will get the mortgage. Lenders always reserve the right to deny a loan if new information comes to light or if you fail to satisfy the stated conditions.
Some scenarios where a conditional approval could still lead to denial include:
- You take on significant new debt before closing
- The appraisal comes back lower than expected
- Issues show up on title report or inspection
- Your employment or income situation changes
If you want your conditional approval to turn into a final loan approval, you should quickly send all the documents the loan officer asks for, avoid making big changes to your finances, and keep the lines of communication open with them. But until you sign the final closing papers, there’s no way to know for sure.
Conditional Approval vs. Pre-Approval and Final Approval
It helps to understand where a conditional approval fits in relation to other common mortgage approvals:
- Pre-qualification – Initial estimate based on limited documentation
- Pre-approval – More formal approval after income/credit review but before full underwriting
- Conditional approval – Underwriter approves assuming remaining conditions met
- Final approval – All underwriting conditions met, loan is cleared to close
The conditional approval comes after your lender has checked more things and looked at your risk level more thoroughly than with a pre-approval letter. But there are still some things that need to be in order before they give the official go-ahead.
How to Get a Conditional Approval on a Mortgage
If you want to get a conditional approval, you’ll first need to submit a full mortgage application with your chosen lender. This includes documents like:
- Loan application form
- Pay stubs
- Tax returns
- Bank statements
- Credit report
- Property information if known
Your loan officer will review your application and submit it to underwriting. The underwriter will scrutinize your credit, income, assets, and debts to decide if you meet the approval criteria.
If you look generally qualified but they need a few more items for verification, they will issue a conditional approval outlining the specific requirements that must be met.
It’s then up to you to provide all requested documents as quickly as possible. This could include bank statements, gift letters, or explanations for any red flags they noticed.
Once you satisfy the lender’s conditions, they will remove the contingencies and issue a final loan approval.
What Happens After a Conditional Approval?
Receiving a conditional approval puts you one step closer to closing on your mortgage. Here are the typical next steps:
- Meet lender conditions – Provide requested documents within required timeframe
- Obtain home appraisal – Lender will arrange for home appraisal
- Receive final approval – Loan goes back to underwriter for final sign-off
- Get clear to close – Final underwriting approval given to close loan
- Closing disclosure – Final loan costs provided 3+ days before closing
- Loan closing – Sign documents and take possession of home
It’s critical to meet all conditions laid out in the conditional approval. This will allow the smoothest path to closing. If issues come up, communicate them quickly to your loan officer.
Final Takeaways
While it may seem ambiguous at first, a conditional approval is a key step forward in the mortgage approval process. It means you’ve passed initial underwriting checks but still need to provide a few last items for final verification.
Be sure to satisfy lender requirements within the timeframe given. This will put you in the best position for your conditional approval to seamlessly transition into a full underwriting clearance. With a bit of diligence, you’ll be signing on the dotted line in no time!
Common conditions to meet
A mortgage application that’s conditionally approved usually requires one or more of the following before the lender can move it forward:
- Additional documents such as bank statements
- A gift letter explaining the source of any gifted funds for a down payment
- A letter of explanation explaining flags like a credit report error, inconsistent income or gaps in employment
- Verification of employment
- Proof of homeowners insurance for the property attached to the mortgage
- Results from an appraisal, and a solution for any appraisal gaps
There might be other requirements, as well, especially if you have a more complex credit or financial situation.
How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.
- A conditional approval for a mortgage indicates a lender intends to give you a loan, but requires some additional information before doing so. This might include the results of an appraisal, a down payment gift letter or proof of homeowners insurance.
- Conditional approval comes after prequalification or preapproval, but before the final approval.
- Even if your application has been conditionally approved, you could still be denied a loan if you don’t satisfy the lender’s requirements or something changes in your credit or financial picture.
What Does A Conditional Approval Mean? Homebuying 101
FAQ
Is conditional approval a good thing?
Conditional approval is the expectation and it shouldn’t cause you any concern. It just means that there are some items still needed (often times appraisal, insurance, title work, tax validations, millions of other possible things).
Can you be denied after a conditional approval?
Yes, a loan can be denied even after conditional approval, according to Experian. Conditional approval means that the lender is likely to give the loan, but there are some requirements that must be met.
Does conditionally approved mean approved?
No, conditionally approved does not mean fully approved. It indicates that a lender has reviewed your application and found it likely to be approved, but there are still outstanding conditions that need to be met before final approval is granted.
How long does it take to go from conditional approval to final approval?
From conditional approval to final approval for a mortgage loan usually takes one to two weeks, as long as the borrower meets the lender’s conditions right away.