Getting Pre-qualified for a mortgage
Before you start house hunting, it is wise to find out what homes are within your price range. This can be done through the simple process of prequalification. To pre-qualify you, a lender or Realtor uses financial information you provide to estimate the maximum mortgage you should be able to obtain. The process doesn't guarantee that your mortgage application will be accepted, but it does help you narrow your search to homes you can afford.

Most lenders use certain formulas to determine how much mortgage to offer you. Typically, your monthly house payment should be around 28 to 30 percent of your total monthly gross income (how much you make before taxes). Your total monthly debt, which includes your mortgage, as well as your debts (e.g., car payment, credit cards and loans), should not be more than 36 to 40 percent of your total gross monthly income.

Getting Pre-approved for a mortgage
Pre-approval is more formal than prequalification and it takes longer. To get pre-approved, you provide the same paperwork you will be asked for when you make a formal loan application. This will probably include your credit and employment history, and information about the cash assets needed for closing. All of this information will be verified.

Pre-approval does not guarantee your loan, but it is a critical first step. You can't get the mortgage until the lender can appraise the property and do a title search. These steps happen after your offer has been accepted and before the loan closing. When you formally apply for final loan approval, certain facts may have to be re-checked. This depends on how much time has passed since the pre-approval. It is likely you will need to provide more recent pay stubs and bank statements; depending on the timing, your latest W2s or tax returns. You will also need to provide all documents and information that was requested earlier. A timely final approval and home closing will depend on it.