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Ask a REALTOR® – What’s the Difference Between Being Pre-Approved and Pre-Qualified for a Home Loan?

If you have ever bought a home, you’ve probably heard the terms “Pre-Approved” and “Pre-Qualified” used as part of the process and may have a basic idea of what they mean. What you may not know is that while they are similar, they do have different meanings. Let’s take a look at what each phrase means as it pertains to buying a home.


Being pre-qualified for a loan is based on a lender’s estimate of the amount a homebuyer can expect to be approved during the loan application process. Getting pre-qualified is an assessment by a lender of the buyer’s financial situation based solely on what the buyer tells a lender and isn’t based on any proof or documentation to verify what the buyer informs the lender.


Pre-Approval is the formal process of obtaining a loan from a lender. An application is completed, and homebuyers need to produce financial documents such as bank statements, W2s for previous years, tax returns, and pay stubs from current and former employers, to name a few of the documents required. Credit reports are pulled showing debts, and the lender can get an understanding of debt-to-equity the buyer has and how much a home they’re going to be able to afford.

The lender will give the homebuyer a letter indicating how much they’re pre-approved to spend on a home.

Having a pre-approval in-hand, especially in a competitive housing market, can help the homebuyer stand out among the sea of other potential buyers of a home. This is true if a property receives multiple offers.

The Last Word

If you’re doing some initial research on buying a home, there’s nothing wrong with speaking to a lender to get an idea of what you can afford. However, when the rubber meets the road, and it’s time to start putting in offers on homes, it’s best to have gone through the mortgage application and loan pre-approval process so you can show home sellers that you’re serious in your intent to buy their home.


Get in touch with an agent to start your journey home.

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