In general, ‘prior to fund’ means your loan approval is almost at the goal post. When lenders issue an initial decision, there will still be things needed to complete even though you’ve submitted everything your lender asked for. There are stages in the loan approval process and even though you probably realize it, lenders have given these stages different names.

When you receive your initial approval, there will still be some items needed. Usually these items are simply nothing more than getting your loan file in compliance. There are items in your file referred to as credit documents, things such as your paycheck stubs and W2s. These need to be within a 30 day window and many times if your loan application goes beyond 30 days, you’ll be asked to update a few things. This is common, especially so when a loan is submitted for a preapproval before a property is even located. You submit your documentation and begin shopping for a home. In all likelihood your credit documents will be more than 30 days old before you close.

Now, let’s get back to those stages. Upon an initial approval, the additional things needed are called ‘loan conditions’ or simply ‘conditions.’ There are ‘prior to doc’ conditions and ‘prior to fund.’ Prior to doc means certain things are needed before loan documents can be printed. This stage means you’ve received an initial approval but there are things needed before the loan can continue through the approval process. The lender won’t do anything with your application until you’ve provided the requested items. After you do provide those items, the lender will review them to make sure they’re what was being asked for and once that determination is made, your loan papers are transmitted to the settlement agent.

You go to your settlement, sign a bunch of paperwork and provide the needed cash to close for your down payment and closing costs. You sign, provide the funds. But you’re not exactly finished. There is a ‘prior to fund’ condition outstanding. You’ve been asked to provide an updated paycheck stub and bank statement. A prior to fund condition is a minor issue but an issue nonetheless. Prior to fund conditions are typically the easiest to comply with.

If the updated pay stub was with you at closing, you’ll give it to the settlement agent. If you need to go home and get it, your loan won’t fund until that ‘PTF’ condition is met. You present the stub to the agent, the lender reviews it and tells the lender that all conditions have been met. The lender releases the funds. You are now an official homeowner.