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Get pre-approved before you tour a single home in Colorado. A pre-approval is a lender's written statement, based on your verified income, assets and credit, of the loan amount you qualify for, and in the Denver metro a listing agent will not present an offer without one attached.
This guide explains what a Colorado pre-approval covers, how it ties into the deadlines in the Colorado Contract to Buy and Sell Real Estate, what it costs (nothing), and which Colorado loan programs surface during the process. For the step-by-step version, read the Colorado mortgage pre-approval guide.
What is mortgage pre-approval and how is it different from pre-qualification?
Pre-qualification is an estimate. You tell the lender your income and debts, nobody verifies anything, and you get a rough number. Pre-approval is verification: the lender pulls your credit, reads your pay stubs, W-2s and bank statements, runs the file through automated underwriting (Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Product Advisor), and issues a letter with a maximum loan amount, a loan type and an expiration date.
Some Colorado lenders go one step further and issue a fully underwritten pre-approval, where a human underwriter signs off on everything except the property. That letter carries near-cash weight in a multiple-offer situation in Highlands Ranch or Centennial, because the only remaining conditions are the appraisal and title.
Why do Denver metro sellers require a pre-approval letter with the offer?
Because the Colorado contract lets a buyer walk away with the earnest money if financing falls through before the Loan Termination Deadline. A seller who accepts an unverified buyer takes the home off the market for two to four weeks and gets nothing if the loan dies, so listing agents from Fort Collins to Colorado Springs ask for the letter up front.
- Multiple offers. When two offers are within $5,000 of each other, the one with a fully underwritten pre-approval from a known Colorado lender wins.
- Showings. Many Denver listing agents and every new-home builder sales office ask for a pre-approval before scheduling a private showing.
- Negotiation. A verified buyer asks for a seller credit toward closing costs or a 2-1 buydown and gets it, because the seller believes the deal will close.
How does pre-approval fit the Colorado contract deadlines?
The Colorado Real Estate Commission's residential contract (form CBS1) runs on dated deadlines, and three of them are financing deadlines. A pre-approved buyer meets all three without scrambling.
- Loan Application Deadline. The date by which you must have a full application in with your lender. A pre-approved buyer already has one; the lender just adds the property address.
- Appraisal Deadline. The date by which the appraisal must be back and any low-value objection made. Pre-approved buyers order the appraisal the day the contract is signed.
- Loan Termination Deadline. The last day you can terminate for financing and keep your earnest money. On Front Range contracts this lands 7 to 10 days before closing. Miss it, and the earnest money (1% to 2% of the price, so $6,000 to $12,000 on a $600,000 home) is at risk.
The guide to making an offer on a Colorado home walks through every deadline in order, and the escrow guide covers what happens after the seller signs.
How much house does a pre-approval say I can afford on the Front Range?
The lender's number comes from your debt-to-income ratio (DTI): total monthly debt payments, including the new house payment, divided by gross monthly income. Underwriting approves files up to 43% to 50% DTI depending on credit score and reserves. Set your own ceiling lower; a payment at 50% of gross income leaves nothing for a $12,000 hail-damaged roof.
Denver metro median close prices sit in the $580,000 to $620,000 range. Here is the cash it takes to get into three Front Range price points, before any seller credit or down payment assistance:
| Purchase price | 3.5% down (FHA) | 5% down (conventional) | 20% down | Closing costs (2% to 3%) |
|---|---|---|---|---|
| $450,000 (Aurora, Thornton, Pueblo) | $15,750 | $22,500 | $90,000 | $9,000 to $13,500 |
| $600,000 (Denver, Littleton, Arvada) | $21,000 | $30,000 | $120,000 | $12,000 to $18,000 |
| $750,000 (Highlands Ranch, Parker, Boulder County) | $26,250 | $37,500 | $150,000 | $15,000 to $22,500 |
Closing costs are itemized in the Colorado closing costs guide. Compare these price points against real listings on the Denver home search or the Aurora home search.
What documents does a Colorado lender ask for at pre-approval?
- Income. 30 days of pay stubs, two years of W-2s, and two years of federal tax returns if you are self-employed, commissioned or own rental property.
- Assets. Two months of statements for every checking, savings, brokerage and retirement account you will draw from. Every deposit over 50% of your monthly income needs a paper trail.
- Identity and residence. Driver's license, Social Security number for the credit pull, and two years of addresses.
- Debts. The credit report covers most of it; add child support orders, private loans and any co-signed debt.
- Gift letter. If a relative is funding part of the down payment, the lender needs a signed gift letter and proof the funds left the donor's account.
What credit score do I need to get pre-approved in Colorado?
Credit score is a big factor in determining the terms of your loan, and it sets the floor for which programs you qualify for:
- FHA: 580 for 3.5% down; 500 to 579 requires 10% down.
- Conventional (Fannie Mae and Freddie Mac): 620 minimum; pricing improves at 680, 720 and 760.
- VA: the VA sets no minimum; most Colorado lenders require 580 to 620.
- CHFA programs: 620 minimum for most Colorado Housing and Finance Authority loans.
Pre-approval is the moment you find out. If the score is short, the Kenna Credit Care mortgage readiness program lays out the paydown and dispute plan to reach the next tier, and a 40-point move from 660 to 700 cuts the rate and the mortgage insurance on a conventional loan.
Does pre-approval lock my mortgage rate?
No. A rate lock is a separate step that happens after you are under contract on a specific address. Standard locks run 30, 45 or 60 days, and the lock period must reach the closing date on the contract. Some Colorado lenders offer a lock-and-shop program that holds a rate for 60 to 90 days while you search, with a float-down if mortgage rates fall before closing. Ask at pre-approval whether that option exists and what it costs.
Which Colorado loan programs show up at pre-approval?
A pre-approval conversation with a Colorado lender covers the programs a national online lender never mentions:
- CHFA. The Colorado Housing and Finance Authority offers first mortgages paired with down payment assistance, as a grant of up to 3% of the loan or a second mortgage of up to 4%, with income limits by county and a required homebuyer education class.
- metroDPA. Down payment assistance for buyers in participating Denver metro cities and counties.
- FHA and VA. Government-backed loans with lower down payments; see the FHA and VA home buying guide and the FHA vs. conventional comparison.
- Temporary buydowns. A seller-paid 2-1 or 3-2-1 buydown lowers the payment for the first two or three years; the 3-2-1 buydown page shows the math.
- Assumable loans. FHA and VA loans written in 2020 and 2021 carry rates near 3%, and the Colorado assumable mortgage guide explains how to take one over.
The Kenna Real Estate Group works with Mike Oswald, VP of Mortgage Lending at Rate, NMLS 261003, Equal Housing Lender, for Colorado pre-approvals. You are free to use any lender. Program details and current options are on the Colorado home financing guide.
How long is a pre-approval letter good for, and what cancels it?
Most letters expire 60 to 90 days after the credit pull; a Denver search that runs longer needs a refreshed credit report and updated pay stubs. Four things cancel a pre-approval outright between the letter and closing:
- A new car loan or lease. A $650 payment cuts your approved price by $90,000 to $110,000.
- A job change. Same field and salaried is fine; a move to commission or self-employment restarts the two-year history clock.
- Large unexplained deposits. Cash deposits with no paper trail are excluded from your assets.
- New credit cards or furniture financing. Every new account is a new inquiry and a new payment. Buy the couch after closing.
Does getting pre-approved hurt my credit score?
A mortgage pre-approval is a hard inquiry, and one hard inquiry moves a score by fewer than five points. FICO treats every mortgage inquiry within a 45-day window as a single inquiry, so you can get pre-approved with two or three Colorado lenders in the same month and compare Loan Estimates at no extra cost to your score.
What does pre-approval cost in Colorado?
Nothing. Colorado lenders do not charge for a pre-approval; some collect a credit report fee of $30 to $60 that is credited back at closing. The first real cost is the appraisal, $600 to $900 on a Front Range single-family home, and that is ordered only after you are under contract.
How do Colorado property taxes, insurance, HOA dues and metro districts change the payment?
The pre-approval payment is PITI: principal, interest, taxes and insurance, plus HOA dues where they apply. Two of those four move a lot by county and subdivision in Colorado, so the same loan amount produces different approved prices in different towns.
- Property taxes. A $600,000 home in central Denver pays about $3,000 to $3,500 a year. The same price in a Douglas County or Adams County metro district, where district bonds add 50 to 90 mills, pays $5,000 to $7,000. Read the guide to HOAs, metro districts and taxes in the Denver suburbs before you pick a town.
- Homeowners insurance. Front Range premiums run $2,000 to $4,500 a year on a single-family home because of hail, and a home in a wildfire zone in the foothills west of Boulder, Golden or Colorado Springs costs more or requires a separate carrier.
- HOA dues. $0 in most of older Denver; $50 to $150 a month in Highlands Ranch (HRCA); $250 to $600 a month for a condo.
When should I get pre-approved for a spring purchase on the Front Range?
Denver metro inventory peaks in May and June. Get pre-approved in January or February, use the winter to fix credit and gather documents, and be ready to write on the first weekend of a new listing in April. Our post on buying now or waiting for lower Colorado mortgage rates shows why a rate you can refinance beats a price that keeps rising.
Do I still need pre-approval for a new-construction home in Colorado?
Yes. Builders in Parker, Castle Rock, Erie and Windsor require one before writing a purchase agreement, and most tie their incentives to the builder's lender. Get an outside pre-approval first so you know what the builder's offer is worth; the new-construction buyer's agent page explains why the sales office is not your agent.
Where to go next
- First-time home buyer guide for Colorado
- The Colorado home buyer's guide
- First-time homebuyer programs in Denver: grants, loans and assistance
- What is needed to close on a house in Colorado
- Search every home for sale in Colorado
- Kenna Real Estate Group agents
Talk to the Kenna Real Estate Group
The Kenna Real Estate Group at Keller Williams DTC connects Colorado buyers with a local lender, reviews the pre-approval letter before the first showing, and writes offers that meet every deadline in the Colorado contract. Call or text 303-955-4220. A live person answers. Not a robot, not a phone tree. When your letter is in hand, search every home for sale in Colorado.