Conditional Home Loan Approval: Why and When It Expires

A conditional approval is given after you apply when your chosen lender decides the home loan will reach approval if certain conditions of the loan are met, like verification of employment and income information. Our Processors will request documentation as proof to meet the conditions your Loan Specialist set.

But did you know that conditional approvals have a time limit? Vanderbilt is here to explain. Find out about expiration dates, why they are in place and what you can do if your conditional approval runs out.

When Does My Conditional Approval Expire?

Your conditional approval’s expiration depends on the lender. The timeline can range from 30-120 days, but for many lenders, a conditional approval is good for 60-90 days. At Vanderbilt, our conditional approvals are valid for 120 days.

There are a few common scenarios that could cause your conditional approval status to exceed that allotted time and expire:

• Change in Employment - If you are starting a new job, your home loan team would need time to verify your new employment and update your income.
• New Debts - Maybe your teenager recently received their driver’s license and you bought a car for them to use. Large purchases like a car that occur during the home loan process would need to be updated as a debt and considered by your Loan Specialist. We do not recommend opening or closing new lines of credit or making large purchases while you’re in the home loan process.
• Home/Land Search - You may also need more time to decide on the home you want to move forward with, or you may have trouble finding land or a community lot for your new home.

If these scenarios take an extended amount of time or occur close to the expiration date, your conditional approval may expire before you reach closing.

Why Do Conditional Approvals Have Time Limits?

So, you may be wondering why a conditional approval can’t last forever. When you receive your conditional approval, that approval is based on your information at that time. As the conditional approval expiration gets closer, the likelihood of your employment or income circumstances changing can increase as time passes. Lenders must assess your home loan application based on the current information you have available. When you have a big changes like a new job, it can affect your loan terms and cause your home loan process to take more time.

Having a time limit on your conditional approval is actually a positive thing because working within the conditional approval date window gives you more of a timeline and helps cut down on delays big changes could cause. Also, change does not have to be negative. Getting that new job may increase your income, giving you more favorable loan terms.

What Happens If My Conditional Approval Expires?

If the conditional approval does expire, that does not mean the loan process has to start all over. You may have to reapply for a new approval from your lender, and please note that your application could need a new credit inquiry. Your lender may ask for some simple documentation like a recent check stub or bank statement. This is to ensure that your income and loan application are up to date.

If you want to learn more about what kinds of loan conditions are required in a conditional approval, check out our helpful breakdown of what they can be and how to meet them.