Pre-Qualified vs. Pre-Approved: What’s the Main Difference?

Key takeaways

• A pre-qualification is an estimate of how much you might be able to borrow, based on basic financial info you provide.
• A pre-approval is a conditional offer from a lender stating how much they’re likely to lend you, pending final underwriting.
• Pre-approvals hold more weight during the homebuying process than pre-qualification.

If you’re considering buying a home, you’ve likely heard that you need to be pre-qualified or pre-approved in order to get a mortgage. While these terms are often used interchangeably, there are distinct differences between the two that every homebuyer should understand.

In this Redfin article, we’ll outline the differences between pre-qualification vs. pre-approval and which option is right for you. Whether you’re touring homes in Norfolk, VA, or looking at houses in Dallas, TX, here’s what you need to know about being pre-approved vs. pre-qualified.

What does pre-qualification mean?

A pre-qualification is an informal look at your finances, with information you provide to a lender. It gives you an estimate of how much you might be able to borrow and helps you gauge your overall financial picture. 

If you’re just starting to consider purchasing a home, a pre-qualification is a good indicator of your borrowing power. Since it’s a surface look at your financial situation, you have the opportunity to work on improving your finances before getting a pre-approval. 

What does pre-approval mean?

A mortgage pre-approval is an official statement from a lender showing how much you’re qualified to borrow. It also determines the type of loans you may be approved for and what your interest rate may be. Redfin real estate agent Joe Rath explains that a mortgage pre-approval, “certifies what you’re able to afford.” It shows you’re a serious buyer and that your offer should be strongly considered. 

During the mortgage pre-approval process, a lender asks you to provide documentation such as W-2s, bank statements, tax returns, and proof of assets, among other things. The lender will run your credit report, which will result in a “hard inquiry,” meaning it can cause your credit score to decrease by a few points.

What’s the difference between pre-qualification vs pre-approval?

A pre-qualification gives you a general idea of what you can afford, while pre-approval confirms it with verified financial information and a credit check.

When should you get a pre-qualification?

A pre-qualification is good if you’re casually looking at homes, but not necessarily planning to make an offer. It also gives you insight into how much you can afford to pay for a home and what mortgage you may qualify for. Your credit score won’t be affected by a pre-qualification if you decide you’re not ready to buy.

When should you get a pre-approval?

A pre-approval is good if you’re ready to buy a home soon, especially if you’re in a competitive market. Pre-approvals have an expiration date, so it’s important to get one if you’re serious about buying a home in the near future. It also triggers a hard inquiry on your credit score, so only get a pre-approval when you need it.

FAQs about pre-approval and pre-qualification 

How long does a mortgage pre-approval last?

Mortgage pre-approvals are typically good for 90 days. The pre-approval letter will show an expiration date, after which it’s no longer valid. Pre-approval letters “expire” because a borrower’s employment, assets, and debts can change. Lenders need up-to-date information before agreeing to another pre-approval. 

Do I need to be pre-qualified before getting pre-approved?

No, you don’t have to be pre-qualified to get pre-approved. If you know you’re financially ready to buy and want to start the homebuying process, you can skip pre-qualification and apply for pre-approval.

When is the best time to get pre-approved?

Ideally, you’d have your mortgage pre-approval letter before looking at homes. Having mortgage pre-approval shows a seller you’re a serious buyer and may make your offer stand out.

Do you need a pre-approval to make an offer?

No, you don’t technically need a pre-approval to make an offer. However, including a pre-approval letter can strengthen your offer and show the seller that you’re a serious buyer who has a better chance of getting their financing approved.

Can your mortgage application still be denied with a pre-approval?

Yes, a lender can still deny your mortgage after pre-approval. It’s uncommon, but can happen if you took out other lines of credit, left your job, or the home appraises lower than the loan amount.

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