Confused about pre-qualification and pre-approval? You’re not alone! Many first-time homebuyers get tripped up on these mortgage terms; not only do they sound similar they have a few similar qualities. Here we break down the difference between pre-qualification and pre-approval, explaining what each involves. Also learn about the benefits of getting pre-approved, and how it can give you a leg up in today’s competitive housing market.

Venn diagram comparison of pre-qualification and pre-approval for first-time homebuyers. Pre-qualification: 1. Informal estimate of mortgage size a buyer qualifies for based on basic financial info. 2. Also, helps narrow down home and loan options to what you can possibly afford. Pre-approval: 1. Definitive answer on how much you can borrow and possible interest rate 2. Speeds up the buying process 3. Positions you as a strong buyer, like a cash buyer, with a large advantage over prequalified buyers

Pre-qualification: Testing the Waters

Imagine pre-qualification is like window shopping. You get a general idea of what you like and where you might want to shop, but you’re not quite ready to commit.

Pre-qualification is a quick and easy process, often done online with a calculator. First answer some basic questions about your income, job situation, and any debts you have. Then, based on this info (which you provide), a lender will give you a rough estimate of how much you might be able to borrow.

The Perks of Pre-qualification:

  1. Fast and Easy: No need to gather paperwork or get your credit checked (yet).
  2. Budget Compass: Get a general idea of what you can afford, helping point you in the right direction.

The Downsides of Pre-qualification:

  • Not Set in Stone: The estimate is based on what you tell them, and the lender hasn’t verified your finances yet, so sellers likely won’t take your pre-qualification seriously.
  • Can’t look at homes with an agent, yet: Similar to a seller, real estate agents know you may not actually be able to afford the homes you think you’d like to look at and will encourage your to get pre-approved first.

Remember: Pre-qualification is a great first step, but it’s not the real deal – a pre-approval is where things get serious.

Pre-approval: Getting Down to Business

Pre-approval, on the other hand, is like actually having your credit card out and ready to swipe at the store. You know exactly how much you can spend, and sellers know you’re a serious buyer. This gives you the upper hand to other window shoppers when you’re find the right place and want to make an offer right away.

What happens during a pre-approval?

Income, Assets, Debts

You will fill out a mortgage application and answer some questions about your finances, rental or ownership history, and credit history. Then you will provide documents to verify your:

  • Income (think paystubs, W2s, etc.)
  • Assets (bank statements)
  • Any debts you owe (like car payments, student loan payments, credit cards, etc).

Save our Pre-Approval Document Checklistto help you organize your documents before getting pre-approved.


Next, we will pull your credit report to see your credit score, checking to see if there were any red flags in the past that weren’t disclosed. Things like bankruptcy, delinquency on a loan, etc.


We’ll also discuss how much you have set aside for a down payment and closing costs.

Based on this verified information, you’ll receive a pre-approval letter stating the exact amount you’re pre-approved for, and the estimated interest rate.

How Long is a Pre-Approval Valid for?

The pre-approval letter will only be good for 60-90 days. Finances change, interest rates change, and we want to make sure clients still qualify for what they were originally pre-approved for, or maybe they qualify for even more after additional review!

You’ll just need to provide updated (or additional) documents you’re asked for. We will take current interest rates into consideration and how the fluctuations in interest rates could affect your affordability.

Benefits of Being Pre-Approved:

  • Solid Numbers: You know exactly how much house you can afford, no more guessing games.
  • Realistic Expectations: Sets clear boundaries for your home search, so you don’t fall in love with a place you can’t afford.
  • Stronger Offer: A pre-approval letter shows sellers you’re a serious, truly qualified buyer, giving you a leg up on the competition.

Pre-Approval with a Trusted Lender 

Getting pre-approved with a trusted lender provides you with added peace of mind and gives you access to a professional who can run multiple scenarios for you and all the “what ifs”:

We’re here to help, so use our expertise to your advantage now and for your future.

Be Honest and Upfront in Your Pre-Approval

During your application, but honest and upfront about your financial situation. This will help us give you an accurate picture of what you can afford and avoid any surprises down the road. We can often work through many of the challenges our clients are nervous to share with us.
Remember, we are here to serve you! Its our goal to help homebuyers achieve sustainable homeownership and build generational wealth now and in the future.

Pre-Qualification vs. Pre-Approval: Side by Side

Comparison chart between pre-qualification and pre-approval for first-time homebuyers. Pre-qualification: Info verified? No. Turn around time? Speedy, within minutes. Impact on offer strength: Weak. Impact on credit score: None. Pre-Approval: Info verified? Yes. Turn around time? A bit longer (1-3 business days). Impact on offer strength: strong. Impact on credit score: Hard Pull.

Beyond Pre-approval: Setting Sail on Your Homebuying Journey

With your pre-approval letter in hand, you’re officially ready to set sail on your homebuying adventure! Here are some additional things to keep in mind:

  • Work with a Real Estate Agent: A good agent can help you find homes within the budget we’ve set together, negotiate and guide you through the offer process, and answer any questions about homebuying along the way.
  • Factor in Additional Costs: Remember, the mortgage isn’t the only expense. We will also consider closing costs, homeowners insurance, and potential property taxes when discussing your budget.
  • Enjoy the Ride! Buying a home can be stressful, but it’s also an exciting time. Celebrate the milestones and don’t be afraid to ask for help when you need it.

Check out our home loan process map to see what’s to come in your homebuying journey. 

By understanding the difference between pre-qualification and pre-approval, you’ll be a more informed and confident homebuyer. With the right preparation and resources, you’ll be well on your way to finding your dream home!

When you are starting the homebuying process, you’ll hear many real estate and mortgage industry terms that may sound the same. Two terms that often get confused for one another are “prequalified” and “preapproved”. What exactly is the difference between “prequalification” and “preapproval”? Both can be used to gauge your creditworthiness to be approved for a mortgage, but they are not the same thing. You should understand the difference.


Getting prequalified for a mortgage is a smart first step when you’re considering buying a home. A mortgage prequalification is when you provide basic financial information (such as your income and assets) to get a rough estimate of how much you may be approved for. You can get prequalified by speaking with a lender or even by going online.  If you’re unsure of which lender to go with or how much of a loan you can expect to be approved for, prequalification is a good place to start.


Preapproval is a more formal version of prequalification. You’ll need to give your lender more in-depth information about you and your finances, such as proof of ID, W-2 forms, and pay stubs. The lender will also perform a credit check, so make sure you’re practicing good credit habits in the meantime.  Once the lender determines how much you can be approved for, you will receive a letter stating so. Having a preapproval letter will be an asset when making an offer to a seller; it lets them know you’re able to obtain a mortgage and that you’re a serious buyer.  Additionally, when you have a more concrete idea of how much you can afford, you can be a more informed buyer when searching for homes. A preapproval letter will only be good for 60-90 days, after which you’ll need to repeat the process to get an updated figure. Even though a preapproval isn’t a guarantee of loan approval, having it can expediate the process and will give you an advantage when you’re ready to present an offer.

Prequalification is a sensible jumping-off point when you start your homebuying journey, but it’s merely an informal way for you to see how much of a loan you might be eligible for. It holds no real weight when you’re on the market for a home. A preapproval, on the other hand, will give you firmer numbers to base your choices around and makes you a more attractive buyer to sellers.

If you have questions about getting prequalified or preapproved, contact one of our Licensed Mortgage Loan Originators. If you are ready to begin the process, click here to get started!