What’s The Difference Between Pre-Qualification VS Pre-Approval When Buying A Home?

Table of contents

Pre-qualification and pre-approval can seem a little confusing at first. In simplest terms, pre-qualification is a quick and easy first step toward homeownership, whereas pre-approval is a more thorough and detailed process.

Here’s what you need to know about pre-qualification VS pre-approval for a home loan.

Key takeaways

  • What’s the difference between pre-qualification VS pre-approval for a home loan?
  • Why is it recommended to get pre-approved before shopping for homes?
  • What is a Maximum Loan Amount, and why is it important?
  • What does it take to get pre-approved for a mortgage?
  • Do I have to take multiple hits to my credit score if I want to shop around for different lenders?
  • What documents will I need to provide in order to qualify for a home loan?
  • How do I know if I should go ahead and get pre-approved, or wait until taking that step?

Pre-Qualification: A great first step toward buying a home

If buying a home is like getting married, then pre-qualification is the “dating phase” in the relationship (whereas pre-approval is sort of like getting engaged).

Pre-qualification is a fancy word that basically just means talking to a mortgage advisor. Think of pre-qualification as a great first step toward buying a home. There are no major commitments or credit checks required at this stage.

During pre-qualification, you’ll consult with your mortgage advisor, they’ll ask you what you’re looking to accomplish as far as owning a home, get a better understanding of your story and how they can help you, and they’ll also ask some basic questions about your finances.

Depending on your conversation, your mortgage advisor may be able to give you a rough estimate of what you may qualify for, along with what your monthly mortgage payments would be.

If you’re working with Hero Homebuyer Programs™ mortgage advisor, they’ll be happy to do the research FOR you to find the best financial benefits, programs, and local grants available to help you save on your home purchase!

After getting pre-qualified, you can decide whether you want to move forward with the pre-approval.

Why should I get pre-approved BEFORE shopping for homes?

Remember that marriage analogy from before? Well shopping for homes without getting pre-approved for a home loan… that’s kind of like trying on wedding dresses before you’ve gotten engaged.

Sure, a lot of people might start house shopping before getting pre-approved, and that’s not the end of the world…

But it is strongly recommended that you get pre-approved BEFORE you start house hunting. (In fact, some realtors won’t even take you out shopping for homes until you get that pre-approval letter in hand.)

Here are the benefits to getting pre-approved for a home loan:

You’ll learn your Maximum Loan Amount (IE how much house you can afford).

Knowing your Maximum Loan Amount helps to set your budget, so you know what price range you’re working with during your home search.

Getting a Pre-Approval Letter helps you stand out as a serious buyer.

When you find a home you love and are ready to make an offer, having that Pre-Approval Letter in hand basically says to the seller, “Hey Seller, I’ve done my homework, I know how much I can afford, so you should take my offer seriously.”

Let’s say you find a home you love and want to pounce on making an offer. If you haven’t already been pre-approved, then that can delay you and prevent you from making an offer. And the longer you wait to put down an offer… the more likely that another buyer is to swoop in on that home.

What does it take to get pre-approved for a home loan?

Pre-approval is a lot more detailed than pre-qualification.

Here’s what’s required to get pre-approved:

  1. Credit Check
  2. Loan Application
  3. Document Collection

Credit Check For Pre-Approval

Your mortgage advisor will need to pull credit and take a look at your report. After pulling credit, your mortgage advisor may go over each item on your credit report with you line-by-line just to make sure that everything is correct.

If there’s any item on your report that isn’t accurate, maybe a debt you’ve already paid off that just hasn’t been taken off your report yet, then you can address that ahead of time (instead of it becoming a problem later on down the road).

What if I want to talk to multiple mortgage advisors? Do I have to take multiple hits to my credit?

The great news is, as long as you stay within a 45-day timeframe, you can have multiple lenders check your credit without taking several hits to your score!

According to the Consumer Financial Protection Bureau, “Within a 45-day window, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry.”

This means that you have the option to talk to different lenders and submit multiple mortgage applications, without having to take multiple hits to your credit score (as long as those credit checks are all conducted within a 45-day window).

However, this rule only applies if the credit inquiries have to do with the same loan product (IE a home loan).

For example, let’s say you fill out a mortgage application and have your credit pulled by a mortgage lender. Then, a week later, you decide to apply for a credit card.

Even though you’re staying within that 45-day window, both credit checks would impact your score because those are two different financial products (IE a home loan vs. a credit card).

The Pre-Approval Loan Application

Filling out the loan application can be a bit tedious, but your mortgage advisor will prepare you for this process. 

And depending on where you live, your mortgage advisor may be able to complete the application WITH you to make this process a little easier. 

Here’s some of the information you’ll need to provide when completing your loan application:

  • Personal identification & Contact Info
  • Employment and/or Self-Employment Details
  • Liabilities (such as credit cards, other debts, or leases that you owe)
  • Assets & Income Details 
  • Real Estate Info (if you own any other properties)
  • Military Service (if you or your spouse has served)

The Pre-Approval Document Collection

The exact documentation you’ll need to provide can vary greatly depending on your specific situation. 

After speaking with your mortgage advisor, they should send over a list of what they need from you, so you know exactly what documents are required to get pre-approved.

There are 4 categories of documentation you may need to provide:

  1. Proof Of Income
  2. Asset Statements
  3. Personal Identification
  4. Other Documents

NOTE: You will likely NOT need to provide ALL the documents listed below. 

This is an EXTENSIVE LIST of documents examples, but the exact list of documents required from you will vary greatly depending on your unique situation. 

Proof Of Income Examples (for W2 employees)

  • 30 Days Of Paystubs
  • 2 Years Of W2s
  • Verification Of Employment (VOE) Form

Proof Of Income Examples (for non-W2 employees)

  • 2 Years Of Tax Returns
  • Profit & Loss Statements
  • Balance Sheets

Asset Statements Examples

  • Depository Account Statements 
  • Retirement Accounts
  • Investment Accounts
  • Business Assets
  • Gift Letter (if using gift funds)

Personal Identification Examples

  • Photo ID 
  • Driver’s License
  • Social Security Card
  • Individual Taxpayer Identification (ITIN)

Other Documents Examples

  • Social Security Administrator’s award letter (if receiving Social Security benefits)
  • Divorce decree
  • Bankruptcy documentation
  • Proof Of Rent Payments/Copy Of Lease
  • Business License
  • Copy Of Ratified Sales Contract
  • Child Support / Alimony Documentation

After pulling credit, receiving your loan application, and collecting the required documents, your mortgage advisor will then be able to write up a Pre-Approval Letter which includes your Maximum Loan Amount.

I’ve been pre-qualified, should I go ahead and move forward with pre-approval?

Some people get pre-qualified and then move right along toward pre-approval, while others get pre-qualified and then decide to wait before taking the next step.

That decision is really up to you and dependent on your specific situation. 

Your unique timeline is one of the many factors that come into play when getting you a great deal on your home purchase. 

Knowing when to make certain moves towards homeownership is an important – and oftentimes difficult – decision to make, but you don’t have to go it alone.  

Talking to a trusted mortgage advisor can help you make more informed decisions about your home buying timeline, helping you understand when it’s in your best interest to wait, or to go ahead and move forward toward owning a home.

Picture of Jacquelyn Sublett
Jacquelyn Sublett

I love teaching and writing on real estate, finance and mortgage topics. I find it fulfilling hearing stories of first time home buyers who we have helped with the home buying process. Writer for the Hero Homebuyer Programs™

Connect with the Author:

Recommended Posts

What Our Buyers Think

Jules S.
Read More
"5 star service is what you will get when you work with him!ᅠ Not only does he know his product like no other, he makes a special point of communicating throughout each transaction and his follow up skills are unparalleled. Perhaps most importantly, he delivers on his promises!ᅠ Give him a try for your mortgage needs.ᅠ You will not be disappointed!"
Jeremy H.
Read More
"An outstanding job handling refinances.  One of those knowledgeable, straight-shooters - which is really appreciated when you're shopping for a home loan. He can answer a million of questions with ease.  Looking back at the responsiveness, he was outstanding and you can do everything he suggested."
Jaina D.
Read More
"You can rely on them, very professional and quick in responding to your queries. He is very friendly and makes sure we understand the process and keeps us posted on the status of our loan. His efforts are greatly appreciated."
Eshawn W.
Read More
“By far the best lender we’ve worked with. Got us the best loan amount than any other lender. He worked with us hand in hand, he is professional, and he made the process enjoyable.”
Jaina D.
Read More
"You can rely on them, very professional and quick in responding to your queries. He is very friendly and makes sure we understand the process and keeps us posted on the status of our loan. His efforts are greatly appreciated."
Cass Z.
Read More
“I called looking for information about the process of applying for a mortgage/refinance and am just blown away with how helpful the information I received was!”
Stephanie F.
Read More
“I have hope because of you for making my home ownership dream come true. I feel such a connection with you and am excited to work with you. Have an amazing day!”
Rachel S.
Read More
"Highly ethical, attentive and helpful! A fantastic combination of personable and hard working. He makes everyone feel important and understood."
Cliff S.
Read More
“Hands down the best mortgage professional I’ve worked with in 20 years. Knowledgeable, honest, reliable and above all an outstanding communicator.”
Jose A.
Read More
"He worked on getting the lowest rate and kept me informed on each step of the process from the beginning to closing. Thank You!"
Nicholas H.
Read More
“Thank you for your prompt help and AMAZING assistance. Hands down, best lender I have ever worked with. Top notch!”
Tiffany
Read More
“I would be 100% interested in working more with you! You have proven to be an amazing lender”
Sandy C.
Read More
“Absolutely the most knowledgeable, friendly and honest expert I’ve ever worked with!”
Steve R.
Read More
"A pleasure to work with. He was very prompt and courteous with his responses and genuinely cares about the clients he works with."
Kevin H.
Read More
"Professional, responsive and honest assistance with the whole refinancing process from beginning to end."
Previous
Next

We help you reach home ownership.

No catch. No hidden fees.

Have you served in the military or your community as a healthcare provider, teacher, or first responder? Are you a member of your local union or work for your city government?

Are you looking to buy a home but don’t know where to start when it comes to finding your best home financing options?

At Hero Home Programs™, our teams are dedicated to helping community heroes like you through the home purchasing process by finding the best grants, rebates, and loans in your area in order to maximize your savings and help you achieve homeownership.

Contact our team today to learn how we can and mortgages can change your life.

Resource Guides

Complete A to Z guides on your home purchase journey.

Learn about the process for getting a home loan

What steps you can take to improve your credit score

Tips and tricks for moving into your new home

Your step-by-step guide for buying a new home

Scroll to Top