Pre-qualify vs Pre-approval for Mortgage Loans

4avg.rating 11 votes.

prequalify v spreapprovalWhen you begin your hunt for a new home, things may start off slowly and you might still be debating about neighborhoods and areas to narrow your search. That’s perfectly normal and expected. But eventually, the process will get more serious and you’ll decide on a price range. Once this happens, you’ll probably want to determine if you’ll be able to get a mortgage loan for the amount that you have in mind. There are two approaches that can help.

Home Buying Tips
Ninja Training Guide

  1. Introduction: Renting vs Buying a Home – What’s the Better Option?
  2. 4 Big Things to Consider Before Buying a House
  3. 4 Different Types of Mortgage Loans
  4. The Fixed vs Adjustable Rate Mortgage (Knowing Which to Choose and When)
  5. Pre-qualify vs Pre-approval for Mortgage Loans
  6. How to Choose the Right Home to Buy
  7. 3 Home Buying Options and Alternatives
  8. How to Make an Offer On a House & Conclusion


You can seek a loan pre-qualification letter or be pre-approved. So in this article, you’ll learn what is meant by prequalify vs pre-approval for mortgage loans. You’ll discover that there are major differences.


Unlike the rigorous evaluation that you would go through for an actual mortgage loan, the steps involved for you to be pre-qualified for a loan are relatively simple and quick.

All you need to do is give a loan officer at your desired bank a phone call. The loan officer will gather several pieces of information from you over the phone. He or she will want to know things like your income, debt, employer, and any other pertinent assets.

In most cases, you won’t even be asked for your social security number or other information to check your credit file. Personally, I wouldn’t give them this information even if they asked, because too many of these inquiries could hurt your credit score. And you don’t want any such shenanigans.

The reason the loan officer won’t care about your social security number is because nothing you say or provide is verified. In fact, there won’t be any official paperwork generated. Your conversation will be informal.

However, the loan officer will determine your credit-worthiness and give you an estimate of how much money you’ll be able to borrow based on the information given. Just keep in mind that the bank won’t guarantee that you will get the estimated amount, or that you’ll get a loan from them at all. The bottom line is that nothing can be made official until you go through the formal loan application process.


When you go through the loan pre-approval process, you mean business. This is a formal process and you’ll be requested to complete a loan application. So the loan officer will check your credit report, verify your employment and income, and scrutinize your debt level.

As I mentioned in the section of this guide that dealt with “4 Big Things to Consider Before Buying a House“, the lender will also confirm that your debt-to-income ratio is under 36% or whatever number is stated in their approval guidelines.

At the end of the pre-approval exercise, you’ll be advised of the “maximum” amount of money that you can borrow from the bank. Just keep in mind that it’s not guaranteed that you will actually get the maximum loan amount. The specific amount won’t be revealed until you give them information about the house you are prepared to buy.

But, you will receive a loan pre-approval letter that you can show sellers in order to give them confidence that you’re in a position to make a deal quickly.

Now, because you won’t know the exact amount of your pre-approved loan, don’t do anything to screw with your credit. That includes things like closing credit card accounts, eliminating your current home equity line of credit, etc. Wait until after the new home is officially yours. Any new negative items that appear in your file could cause the bank to lower the amount you can borrow or they could reject your application.

In conclusion, the process to pre-qualify vs pre-approval for mortgage loans doesn’t have to be an either/or proposition. You can do both. Just spread them out over time as you perform your home search. But I think that if you’re dead set on buying a home within a certain time period, you should seriously consider going through the pre-approval process. Just make sure there are no issues with your credit or debt.

>>>How to Choose the Right Home to Buy>>>

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8