Pre-qualification vs. Pre-approval

Couple signing document with lender

When you’re ready to buy a home, you’ll likely come across two terms: pre-qualification and pre-approval.

These words sound similar, and for this reason, some people use them interchangeably. However, they have different purposes and unique benefits. So it’s important to understand how both processes work, and when each is appropriate for your situation.

What is a mortgage pre-qualification?

Pre-qualification is an early step in the mortgage application process. It involves getting an estimate of what you “might” be able to borrow based on financial information you provide and a credit check. This step is less comprehensive, so the lender doesn’t verify the information.

The benefit of a pre-qualification is that it’s quick (completed in minutes) and usually doesn’t require any paperwork. Additionally, it typically includes a soft credit pull, which doesn’t affect your credit score.

Although not a necessary step in the buying process, a pre-qualification can provide a rough idea of affordability, allowing you to better plan your home search.

The downside, though, is that a pre-qualification isn’t a commitment from the mortgage lender. Since it doesn’t involve a thorough analysis of your financials, it carries less weight with sellers and real estate agents.

Even so, it’s a good starting point if you’re curious about what you might be able to afford, but you’re not ready to commit to buying a home.

What is a mortgage pre-approval?

A pre-approval, on the other hand, is a more in-depth process. It involves filling out an official home loan application and providing the lender with supporting documentation such as recent paycheck stubs, W2s, tax returns, bank statements and more.

Unlike the pre-qualification phase, the lender will thoroughly review these documents to determine the maximum amount you can borrow.

Although not a requirement to purchase a home, pre-approvals can give you a strong competitive edge. Once you’re pre-approved, your lender will provide a pre-approval letter that you can submit with your home offers.

This letter shows sellers (and real estate agents) that you’re a serious, qualified buyer.

Another benefit of a pre-approval is knowing exactly how much you can borrow before house hunting. This way, you can focus your home search on properties within your budget.

Likewise, pre-approvals could expedite the entire mortgage process, helping you close sooner.

It’s important to note that pre-approvals involve a hard credit pull, which can temporarily decrease your credit score. They also expire, typically within 60 to 90 days.

Pre-approvals are ideal once you’re ready to start house hunting.

How to utilize a mortgage payment calculator

You don’t have to spend your entire pre-approved amount on a home. Some people purchase properties under budget to keep their mortgage payment within a certain range.

Once you’re pre-approved, use a mortgage payment calculator to estimate your monthly payment based on different factors, such as the loan term (15 or 30 years), estimated interest rate and down payment amount. From here, you can determine a comfortable price range.


A pre-qualification and pre-approval are important steps in the home buying process—but they aren’t the same. Whereas a pre-qualification provides a glimpse of what you “might” afford, a pre-approval is a deeper analysis of your financials and carries more weight.

The local loan experts at FirstBank Mortgage can assist you with a pre-qualification or pre-approval. Our free payment calculator lets you estimate your monthly payment and decide the best price range for your home. It’s an easy-to-use tool that can help you not overspend on a property.

We’re here to help. Anytime.

Have questions? Contact us for neighborly advice.

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