Pre-qualification estimates how much you may be able to borrow, based on a mostly informal evaluation of your finances. Preapproval carries more weight and requires documentation.

Pre-qualification and preapproval sound similar, but typically only one — preapproval — will get real estate agents and sellers to take you seriously.

In today’s competitive market, agents likely will require you to be preapproved before showing you properties.

But there’s a wrinkle to keep in mind. Lenders use their terms to describe the different application and approval phases. For simplicity, we’re using the terms “pre-qualification” to refer to an initial, less formal phase and “preapproval” to refer to a phase involving documentation of financial information and a credit check.

What is mortgage pre-qualification?

Generally in the pre-qualification phase, you describe your credit, debt, income, and assets, although application processes vary by lender. Based on this overall financial picture, the lender estimates how much you may be able to borrow. Some lenders will also do a credit check.

A credit check results in an inquiry on your credit report. A “soft inquiry” doesn’t affect your credit score, but a “hard inquiry,” which happens when you apply for a loan, can lower your credit score by a few points. The impact will be minimal, and credit scoring models generally count multiple hard inquiries in a short amount of time to shop rates as a single inquiry.

A credit check for pre-qualification may involve only a soft inquiry, but the only way to know is to check with the lender. If you’re concerned about even a small drop in your credit score, it might make sense to hold off on applications that involve hard credit inquiries until you’re ready to shop for a mortgage.

You can get pre-qualified over the phone, online, or in person.

Getting pre-qualified can give you a sense of your financial readiness and introduce you to various mortgage options. It’s often a good step for first-time home buyers who are just testing the waters and aren’t ready to jump in.

What is mortgage pre-approval?

A mortgage preapproval takes the process to the next level. Preapproval requires you to provide proof of your financial history and stability. The lender will verify your income, employment, assets, and debts, and will check your credit report.

You’ll provide information in the form of W-2s, a current pay stub, a summary of your assets and your total monthly expenses, and, if you already own real estate, a copy of your mortgage statement.

With many lenders, you can get preapproved online, with phone support from a loan officer if needed.

If you satisfy the requirements, you’ll get a preapproval letter, which states the amount and type of mortgage the lender is willing to offer, along with the terms.

Your real estate agent will want to see the letter. Knowing how much you can borrow will help the agent understand your price range and direct you to appropriate listings. Sellers will also want to know that you’re preapproved. Virtually no offer to buy a home without mortgage preapproval will be considered in today’s market unless the buyer is paying 100% in cash.

Preapproval, though, isn’t a guarantee of final mortgage approval. After you find a home to buy, your application will go through full mortgage underwriting. The lender will review your finances and order a home appraisal to estimate the property’s value and a title search to confirm the property is free of any claims.

Pre-qualification vs. preapproval



May include a credit check.

Includes a credit check.

Requires an estimate but no proof of your credit, debt, income, and assets.

Requires documentation of your financials and verification of employment.

Estimates how much you can borrow to buy a home.

Provides a preliminary mortgage offer, but not a guarantee of full loan approval.

Won’t convince real estate agents and sellers you’re a serious buyer.

Gives real estate agents and sellers confidence in your ability to get a mortgage.

Can take as little as a few minutes to provide information.

May take 30 minutes or more to fill out the application.

Can get an answer in a few minutes.

May take days to get an answer.

Get pre-qualified or preapproved?

If you’re just starting to think about buying a home, getting pre-qualified is a good idea. You’ll get a sense of how much you might be able to borrow, and you can talk to lenders about the types of mortgages to consider and what else you can do to prepare.

But if you know you’re ready to go shopping, you can skip pre-qualification and go straight to preapproval.

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