Pre-Qualification vs. Pre-approval

Two often confused terms in the home buying process are a mortgage loan pre-qualification and a home loan pre-approval. Here’s what you really need to know about each one.


A mortgage pre-qualification is simply an estimate of how much home you can afford and how much money a lender will loan you.

The best time to get a pre-qualification is at the beginning of your home buying process, before you start looking at homes. This involves either sitting with a lender or speaking with one on the phone. Lenders ask you to provide information on your income, assets, debts and a potential down payment amount. Then, the lender provides you with a ballpark figure in writing of how much he/she thinks you could afford to pay for a monthly mortgage.

Pre-qualification is free. This estimate is useful for helping you figure out if buying a home is a viable option, and if so, what your price range would probably be.


A pre-approval provides you with a tentative commitment from a specific lender for mortgage funding.

In this case, you provide a home loan lender with actual documentation of your income, assets, and debts. Then, the lender runs a credit check and works to verify all your employment and financial information. Once you are approved, the lender gives you a letter of commitment stating how much money they are willing to loan you.

With a pre-approval in hand you can start your shopping. Real estate agents and sellers take you much more seriously when you have your mortgage funding in place.

A pre-approval is not a guarantee you will be approved for a mortgage. You only receive the funding when the property appraisal, title search and other verifications check out on the home you have chosen to buy.

If you’re planning to buy a house in the future but aren’t financially ready, talk to a professional. Meet with them face-to-face and provide them with all of your financial documentation. Go through a pre-home buying consultation so they tell you what to do to become pre-approved in the future.