Conditional approval is a stage in the mortgage application process where the lender is mostly satisfied with your loan application but requires you to meet certain additional criteria before you can be fully approved. It is not the same as pre-approval, and it does not guarantee final mortgage approval. Instead, it means the lender is willing to loan you a specific amount of money if you can meet certain criteria. The conditions that need to be met can vary based on the lender and the type of loan, but they may include providing more financial details, giving more information to verify employment, obtaining homeowners insurance, or avoiding large purchases over a specific dollar amount between now and when you close on your home.

Conditional approval occurs near the end of the mortgage application process, after you’ve made an offer and submitted your loan application, but before final approval. At this point, an underwriter conducts a strict documentation review before your loan is conditionally approved. If the conditions aren’t met, the loan application may be denied.

Receiving conditional approval on a mortgage sets you apart as a home buyer and shows that you’ve been through the underwriting process. It can make a stronger case for your application than prequalification alone. If you find yourself in a bidding war with another buyer, the fact that you’ve received conditional approval tells the homeowner that you’re the more serious candidate.

In summary, conditional approval is a positive step in the mortgage application process, but it is not a guarantee of final approval. It means that the lender is willing to loan you a specific amount of money if you can meet certain criteria, and it sets you apart as a home buyer.