Approval in Principle (AIP) means the bank has agreed to extend you the funds for a home loan, subject to a valuation of the property. The bank evaluates your credit-worthiness and determines the value of the home loan they're willing to approve in principle.

What does it mean by approved in principle?

In-Principle approval is a process between a home loan borrower and a Bank (the lender). ... It is a guarantee that the Bank will give you the loan when needed provided information and documents are verified successfully.

Is approval in principle good?

An approval in principle doesn't mean that you have a mortgage yet, or that you'll be guaranteed that exact amount when the time comes, but it does give you a better idea of how much a lender would be willing to give you.