Read the letter, then call
A preapproval letter tells you the lender looked at something. It does not tell you how much. With the buyer’s permission, the lender can usually confirm what was reviewed without sharing private financial details.
- Was credit pulled, and were income and asset documents reviewed, or was this based on stated information?
- Has the file been run through automated underwriting? Any conditions you already know about?
- Does the buyer have the down payment and closing funds documented, and do they need to sell another home?
- Can the buyer cover an appraisal gap, and if so, roughly how much?
- Is the requested closing date realistic for this loan type and property?
What the loan type means for your seller
| Loan type | What your seller should know |
|---|---|
| Conventional | Appraisal gap risk falls on the buyer’s cash. Seller credits are capped by occupancy and LTV. |
| FHA | Requires the amendatory clause. Property must meet FHA minimum property standards, so condition items may need repair. Seller credits up to 6%. |
| VA | Strong buyers, often with little or no down payment. Appraisal includes VA minimum property requirements. Some fees have specific rules. |
| USDA | Property must be in an eligible area. Approval may include a USDA review step, which can affect timing. |
| Cash with appraisal contingency | Confirm proof of funds and whether the buyer will finance after closing. |
Loan type alone does not make an offer weak. A well-documented FHA or VA buyer with a responsive lender can be stronger than a thinly reviewed conventional offer. See seller concession limits by loan type.
Red flags
- A letter with no lender contact, NMLS number or date.
- A lender who cannot say whether documents were reviewed.
- A closing date that does not leave room for the appraisal and the Closing Disclosure timing.
- Funds to close that depend on a sale, gift or assistance that has not been confirmed.
- Frequent changes in the loan amount or program after the offer is accepted.
Comparing two offers
Put the offers side by side on net proceeds after credits, probability of closing and timing. Ask each buyer’s lender the same questions so your seller can compare fairly. If you want a neutral read on a financing question, RFG is glad to explain how a program works; we will not comment on another lender’s borrower.
Common questions
Can the buyer’s lender share the buyer’s credit score or income?
Generally no. Lenders can confirm what has been reviewed and the status of the file with the borrower’s permission, but not private financial details.
Is a prequalification the same as a preapproval?
No. A prequalification often relies on stated information. A documented preapproval reviews credit, income and assets. Ask which one the buyer has.
Should my seller avoid FHA or VA offers?
Not automatically. Review the specific buyer, property condition and lender. Many FHA and VA buyers close smoothly.
Sources and editorial information
Published by The Rice Financial Group. Editorial update: November 10, 2026. How we prepare our resources.
- CFPB: Get a preapproval letter
- HUD: FHA amendatory clause model document
- VA: Home loan program
- Fannie Mae: interested party contributions
Educational information, not an approval, rate quote or commitment to lend. Program rules, pricing and availability can change. Confirm the requirements for your borrower, property and transaction with the mortgage team.
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