Pre-Approval vs Prequalification in San Jose

December 4, 2025

Are you hearing “prequalified” and “pre-approved” used like they’re the same, and wondering which one you actually need to buy in San Jose? You are not alone. In Silicon Valley’s fast, competitive market, the difference can decide whether your offer gets accepted. In this guide, you’ll learn what each term means, what lenders verify, how tech compensation like RSUs fits in, and how to get offer-ready now. Let’s dive in.

Prequalification vs pre-approval: the basics

What prequalification means

Prequalification is an initial estimate based on information you provide about your income, assets, and debts. It is quick and can help you understand a ballpark price range. There is typically no third-party verification, no underwriter review, and no binding commitment from a lender. It is useful for early planning, but it is weak in negotiations with sellers.

What pre-approval means

Pre-approval is a lender-verified, conditional commitment to lend, subject to final steps like appraisal and title review. A lender will review your documents, pull your credit, and often have an underwriter issue a written letter that states a loan amount and program. The strongest version is an underwriter-reviewed conditional approval. Most letters expire in about 60 to 90 days.

The key difference in seconds

Prequalification is an estimate based on what you say. Pre-approval is a verified, conditional yes based on what you show. In San Jose, pre-approval carries real weight with sellers and listing agents.

What lenders verify for pre-approval

Credit and score ranges

Lenders pull your credit and review your history. Credit score drives your rate, your program options, and how much cushion you may need in reserves. As general industry norms, many conventional loans target 620 or higher, FHA programs can allow lower scores, and jumbo loans often prefer 700 or higher.

Income and employment

Most lenders want stable, documented income. For salaried roles, expect to provide recent pay stubs, two years of W-2s, and employer verification. If you receive bonuses or commissions, lenders usually want a two-year history and some evidence it will continue.

For tech compensation like RSUs, vested RSUs that you have sold and deposited into your bank account can count as assets. Some lenders may also consider RSU income if you have a documented vesting history and evidence of ongoing vesting. Unvested equity or unexercised options are generally not counted as qualifying income.

If you are self-employed or a contractor, expect to provide two years of tax returns and possibly a year-to-date profit and loss statement. Some alternative programs exist, but they have different pricing and requirements.

Assets and down payment source

Be ready to show bank and brokerage statements for your down payment and reserves. Gift funds may be allowed with documentation. In competitive situations, sellers often ask for proof of funds for your earnest money and down payment.

Debt-to-income ratio and reserves

Lenders review your total debt payments compared to your gross income. Conventional loans often want total DTI near or below the mid-40 percent range, while FHA targets are similar with possible exceptions. Jumbo loans may require lower DTIs and more months of reserves, often in the range of 3 to 12 months depending on your profile.

Property, appraisal, and title

Your property must meet lender guidelines and appraise for the price you pay unless you cover an appraisal gap with cash. Condos require HOA review, which can affect timelines. Clear title is required before closing.

Your pre-approval document checklist

Photo ID and Social Security number
Two most recent pay stubs covering 30 days
W-2s for the last 2 years (or 1099s/tax returns if self-employed)
Two most recent bank statements for all relevant accounts
Brokerage statements for additional assets
Documentation for large deposits or gift funds
RSU vesting schedule and transaction history if you plan to use proceeds

San Jose market factors that affect financing

Prices and loan types

San Jose and greater Santa Clara County have some of the highest home prices in the country. Many purchases sit above conforming loan limits, which means you may need jumbo financing or a larger down payment. Jumbo loans can require stronger credit, tighter DTIs, and more reserves.

Appraisals, condos, and timing

In fast-moving markets, appraisals may lag. Some buyers add appraisal gap language, waive certain contingencies, or bring extra cash to cover a shortfall. For condos, lenders review HOA budgets and insurance, which can add time to underwriting.

Taxes and insurance

Property taxes and any Mello-Roos assessments add to your monthly housing cost and affect DTI. Homeowners insurance for high-value or coastal-adjacent properties can be higher. Earthquake insurance is optional for most loans, but you should factor it into your total budget.

Why pre-approval wins offers in Silicon Valley

What sellers want to see

Sellers use pre-approval letters to sort offers that are most likely to close. A verified, underwriter-reviewed letter is more persuasive than a simple estimate. Sellers also appreciate proof of funds for earnest money and down payment, plus a lender who will communicate quickly during escrow.

Steps to get offer-ready now

Start with a full pre-approval, not a prequalification.
Choose a lender experienced with RSUs, bonuses, and jumbo underwriting.
Confirm your loan program aligns with your target price and down payment.
Ask what is needed for an underwriter-reviewed letter and how fast it can be issued.
Keep your letter current. Update documents every 60 to 90 days, or sooner if your income or credit changes.
Prepare proof of funds to share with your offer package.

Jumbo and tech pay tips

If your price range may exceed conforming limits, explore jumbo options early.
Document RSU vesting and any sales proceeds clearly.
If you rely on bonus income, gather a two-year history and employer documentation.
If you are self-employed or a contractor, organize tax returns, P&L statements, and business bank statements.

Pre-approval timeline and upkeep

If your documents are ready, many lenders can issue a pre-approval within 24 to 72 hours. An underwriter-reviewed conditional approval may take several days to a week depending on complexity. Most letters remain valid for about 60 to 90 days. To extend, you will likely need to refresh pay stubs, bank statements, and sometimes your credit pull.

Smart risk decisions on contingencies

In multiple-offer situations, you may consider shortening financing timelines or adjusting appraisal terms. These choices can strengthen your offer but also increase risk if the appraisal comes in low or if underwriting identifies new conditions. Before waiving any contingency, talk with your lender about your reserves and with your agent about potential downside.

Make your next move with local guidance

Getting clear on pre-approval sets you up to act fast and negotiate confidently in San Jose. If you want a local partner to coordinate a strong pre-approval, align your loan program with your price range, and package your offer to stand out, connect with Brianna Ramirez. You will get boutique, high-touch guidance backed by deep Silicon Valley expertise.

FAQs

Is a pre-approval a final loan commitment?

No. It is a conditional commitment based on your documents and initial underwriting. Final approval depends on the property appraisal, title, and any changes to your finances before closing.

How long does pre-approval take in San Jose?

With documents ready, many lenders can pre-approve you in 24 to 72 hours. Underwriter-reviewed letters can take several days to a week, depending on complexity.

How long is a pre-approval valid?

Typically 60 to 90 days. Expect to refresh pay stubs, bank statements, and sometimes credit to extend.

Will RSUs or stock compensation count as income?

Vested RSU proceeds in your bank account count as assets. Some lenders will count RSU income if you have a documented vesting history and evidence of continuation. Unvested equity is generally not counted.

Do I need a jumbo loan to buy in San Jose?

Many buyers do because of local prices. Check your target price against current conforming limits and compare jumbo program requirements with your lender.

What should I include with my offer besides the price?

A lender pre-approval letter with contact information and proof of funds for earnest money and down payment. An underwriter-reviewed letter can be even more persuasive.