Pre-Approval Letter - A pre-approval letter is a document provided by a lender that indicates the maximum loan amount that a borrower is qualified to receive. This letter is based on a preliminary review of the borrower's creditworthiness and financial situation and is not a guarantee of loan approval. A pre-approval letter can be a useful tool for homebuyers as it gives them an idea of how much they can afford to spend on a home and can also strengthen their offer when making a purchase.