Understanding The Differences Between Prequalified and Preapproved 

prequalifiedWhen it comes to mortgages, the terms pre-approval and pre-qualified can be thrown around fairly frequently. Some people even use these words interchangeably. However, they are not the same thing and it’s important to understand their differences before you start shopping for a home. 


Pre-qualifying for a mortgage will always happen prior to being pre-approved.

The process for pre-qualifying for a mortgage is usually quite simple. First, a buyer will speak with a mortgage professional. In that conversation, the buyer will give a broad overview of his or her credit history and financial situation, including their debt, income, assets, and employment history. 

This entire process is usually completed over the phone and is required before a lender will discuss pre-approval.

Only if prequalification goes well will the lender will invite the buyer to then apply for pre-approval.


Pre-approval is a much more involved process than pre-qualification. 

At this stage, the buyer is basically going through the complete mortgage application process. In fact, in most cases, the buyer will pay the mortgage application fee to obtain a pre-approval. 

Being pre-approved means that a lender has (1) checked the buyer’s credit, (2) verified their employment and income, and (3) has decided that a buyer is eligible for a mortgage loan. This third part will also specify just what dollar amount and interest rate that the lender has determined is appropriate.

Pre-approval may take some time because the lender will be thorough. The plus side though is that securing pre-approval can make the house-buying process significantly smoother in the long run. 

Why would it make the home buying process smoother?

Because being pre-approved for a specific dollar amount gives you a starting point and keeps you from wasting your time. 

There’s no use in shopping for a $600,000 home if a lender will only approve you for a $500,000 mortgage. 

Having this knowledge up front narrows down the options. 

What Pre-Approval Provides The Buyer preapproval

Once a buyer secures a pre-approval from a lender, he or she will know key information about what they’re working with. 

This information includes:

  • The loan amount they’re eligible to receive
  • The interest rate for their mortgage loan
  • How long the pre-approval is good through, better known as the “rate lock period”

The buyer will also receive a letter from the lender with all of these details explained. 

What You’ll Need For The Pre-Approval Process

Here’s what you’ll need to show the lender to start the pre-approval process:

  • Tax returns from the previous 2 years
  • W2s from the previous 2 years
  • Pay stubs from the past 30 days
  • Bank account statements from the past 60 days

The lender will also ask you to sign a letter authorizing them to pull your credit as well. 

One Important Caveat

Even with all of this effort, it’s important to note that obtaining pre-approval does not automatically approve you for a loan. 

Though you will receive a letter with a specific amount and interest rate from the lender, it isn’t actually the lender that approves your loan. An underwriter will eventually be the one to make that final approval decision, but only after you have proper purchase contracts in place on a specific home.


Understanding the difference between being pre-qualified and pre-approved is important as you move through your home buying journey. And though the pre-approval process can be lengthy, it’s worth it to give you a starting point for your home search. Once you’ve got that pre-approval letter in hand, you’re ready to get to work finding the home of your dreams!

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