Pre-Qualification vs Pre-Approval

Pre-Qualification vs Pre-Approval

Often times, the two terms are confused in the home buying process, even between loan officers and real estate agents. So, let’s take a closer look at what they are really about:


A mortgage loan pre-qualification is basically an estimate of how much of the house you can afford, as well as the amount of money a lender would be willing to loan you. It is best to get a pre-qualification before you even begin looking for houses. Speak with a lender regarding your income, debt, assets, and discuss a potential down payment amount. It is the lender’s job to give you an idea of how much he/she thinks you can afford for a monthly mortgage. It is cost free on both sides and ultimately helps you determine whether you can afford to buy a home and a good price range to stick with.


A pre-approval occurs when you have a tentative commitment from a lender for mortgage funding. To get pre-approved you must provide a lender documentation of your income, assets, and debts. This process usually has an application fee with a credit check to verify information. When you are approved, your lender gives you a letter of commitment stating how much money the bank is willing to loan for your home purchase. After obtaining your pre-approval, you may start shopping for homes. Pre-approval is good to have because it shows real estate agents and sellers that you have your mortgage funding in place. Remember though: a pre-approval does not guarantee that you will be approved for a mortgage loan. Funding will be given only when the property appraisal, title search, and other verifications check out on the home you have chosen to buy.