Mortgage Pre-Approval in SF: Credit, DTI and What You Can Afford

Get a fully underwritten pre-approval, not a pre-qualification, and get it from two lenders. In San Francisco a listing agent reading twelve offers on a Tuesday night will call the lender named on your letter, and the lender's answer ("underwriting has already signed off on the borrower, we only need the appraisal") is worth more than a slightly higher price from a buyer whose file nobody has opened. This article covers what lenders check, how affordability is really calculated at SF prices, what to gather, and how the letter should read on offer day.

Pre-qualification vs pre-approval vs fully underwritten approval

The CFPB describes a pre-approval as a statement that a lender is tentatively willing to lend up to a certain amount, based on assumptions, not a guaranteed offer. The terms are not standardized, so ask each lender exactly what it checked. The San Francisco Chronicle's advice to local buyers, in a 2015 piece on competitive offers, is blunter: a fully underwritten approval differs from a basic letter. Local lenders commonly say a buyer with one can close in roughly 15 to 21 days if an appraiser is available; as of 2026-10-25, check current turnaround with your lender.

Credit score tiers and DTI limits

DTI counts every monthly debt on your credit report plus the new housing payment: principal, interest, property tax, insurance, mortgage insurance and HOA dues. Student loans, car leases and the minimum on any card balance all count. Paying off a $400 a month car loan before applying raises your approvable loan by roughly $64,000 at a 6.4% rate.

How much you can afford at SF prices

Two numbers matter and they are rarely the same: the maximum a lender will approve, and the payment you can live with.

Take a $1.5 million purchase with 20% down. A $1.2 million loan at 6.4% carries principal and interest of about $7,500 a month. San Francisco's property tax rate is about 1.18% of assessed value (the Board of Supervisors sets it each fall), or about $1,475 a month on $1.5 million. Add a few hundred for insurance and, on a condo, HOA dues of $600 to $1,200. The all-in payment is close to $10,000 a month. At a 43% jumbo DTI with no other debts, that implies gross income of about $280,000 a year.

HOA dues shrink your loan directly. At 6.4% every $100 a month of dues removes about $16,000 of borrowing power, so a $900 dues building costs you roughly $144,000 of loan compared with a house. Run the numbers on the building, not just the price. The true cost of owning and the readiness check help you set the number you can actually live with before a lender tells you a bigger one.

The document list

Have these ready before you apply so both lenders can underwrite in days, not weeks:

• Two years of W-2s and the two most recent pay stubs
• Two years of federal tax returns, all schedules, if you are self-employed, earn bonus or commission income, or own rental property
• Two months of statements for every account you will use for down payment or reserves, all pages, with large deposits explained
• Gift letter and donor transfer evidence for any gift funds
• RSU vesting schedule and two years of brokerage statements showing vests and sales
• Bonus history (two years) and the current year's offer or comp letter
• Photo ID, and the signed authorization for credit
• Divorce decree, child support orders or trust documents if they affect income or assets
• For self-employed buyers: two years of business returns, a year-to-date profit and loss, and business bank statements

Fannie Mae's rules allow RSU income with a 12-month history for time-based awards and 24 months for performance awards, counted only once the shares have vested and been distributed to you without restrictions, and sign-on grants do not count; ask each lender how it prices the shares, because the averaging method comes from the Selling Guide plus lender overlays. Jumbo lenders layer their own rules, so raise RSU and bonus income on the first call.

Why two pre-approvals cost nothing and create leverage

Pre-approval is free at most lenders. The second one gives you three things: a rate and fee baseline to negotiate against, a read on which lender actually underwrites up front, and a backup if the first lender stumbles in escrow.

The credit cost is minor. FICO ignores mortgage inquiries less than 30 days old and groups multiple mortgage inquiries within a shopping window into one: 45 days under newer FICO versions, 14 days under older versions that some lenders still pull. Apply with both lenders inside two weeks and the effect on your score is a few points at most.

How the letter should read for SF offers

Ask your lender for a letter you can reissue for each offer, and make sure it:

• Names the property address and is dated within a few days of the offer.
• States an amount that matches your offer, not your maximum. A letter for $1.9 million attached to a $1.6 million offer tells the seller to counter higher.
• Says the file has been underwritten and lists only property-related conditions.
• Avoids tells about loan type or down payment that weaken you, such as "3% down conventional" or "subject to sale of current home".
• Gives the loan officer's direct cell number and confirms they are reachable on the offer deadline, evenings and weekends included.

Why SF listing agents call your lender

Because they have watched deals fall apart. A listing agent weighing two similar offers wants to hear a lender say the borrower is underwritten, the appraisal is ordered on day one, and the loan can fund inside the contract's escrow period. Local lenders with a track record of closing SF condos and TICs on time get the benefit of the doubt; an out-of-state call center that cannot speak to the file does not.

Coordinate before offer day: your agent and lender should talk once about your strategy, the lender should be ready to call the listing agent within an hour of your offer going in, and your lender should know whether you plan to waive the appraisal or loan contingency so the letter and the conversation match. Choosing an agent covers how to tell whether an agent runs this play.

How long it lasts and what re-triggers underwriting

Most letters run 60 to 90 days; some lenders issue them for only 30. Renewal is a document refresh, not a new application. What actually resets underwriting:

• A job change, even to a higher salary, especially a move from salary to commission or contract pay
• New credit: a car, a card, a furniture financing plan
• Large deposits or transfers the lender has not seen
• A missed RSU vest or a bonus that comes in lower than the history
• A rate move that changes your maximum payment

Freeze your financial life from application to funding. Use how much to offer and the comps tool to decide what you will actually bid, and keep your approval amount aligned with that number rather than your ceiling.

What to shop for right now

• Mortgage lender for pre-approval (savings: high). Pre-approval is usually free, and getting two sets your rate baseline and shows you which lender underwrites up front and moves fastest. That speed matters when offer dates are days away. Apply with both inside 14 days, ask each for a sample letter and its typical days to fund, and keep the stronger underwriter as your primary.