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Pre-Qualification And Pre-Approval: What’s The Difference?

Pre-Qualification And Pre-Approval Definitions

Before you go out and buy your first home, you apply for mortgage pre-approval, or get pre-qualify for a home loan. First of all, it’s important to know the difference.

  • With mortgage pre-qualification, you provide your income, asset and credit information, and lenders estimate the loan amount you can afford.
  • With mortgage pre-approval, you complete a full mortgage loan application and supply income, asset and credit information documentation. Underwriters certify this documentation and issue a conditional loan approval.

Pre-Qualification Pros And Cons


A pre-qualification is usually pretty quick, and you don’t have to supply documentation. A lender can pre-qualify you over the phone or online, sometimes in as little as 5 minutes.

If you have good credit, a W-2 salary, and documentable assets with no recent large deposits, a pre-qualification may be accurate enough.


Pre-qualification is based on verbal information, it’s not as “solid” as a pre-approval.

You may be self-employed. Or you may earn a bonus, differential, second job or overtime income. You tell the lender you make $75,000 per year. But perhaps the lender can’t count all income towards the approval. For instance:

  • You can only count income after write-offs if you’re self-employed
  • You typically need two years’ history of bonus, overtime, second job, and differential income to use it for mortgage qualification

Depending on the way in which you earn your income, the lender may only count $50,000 of the $75,000 as “qualifying.” That’s a big difference when applying for a mortgage.

Lenders don’t always check your credit before issuing a pre-qualification letter. Inaccurate information on your credit report or a too low FICO score could stop your mortgage approval in its tracks.

In short, a pre-qualification is not as reliable as a pre-approval. You could find yourself half-way through a home purchase and unable to secure the financing needed to close the deal.

For this reason, many home sellers and real estate agents do not take buyers with just a prequalification letter seriously. Your offer will not receive the same consideration as one from a pre-approved buyer.

Pre-Approval Pros And Cons


A pre-approval gives you more clout as a serious buyer. The lender collects your pay stubs, W2s, and bank statements. To obtain a pre-approval, the lender also pulls your credit report. Human underwriters verify and certify your income and assets. The end result is a full mortgage approval, minus the property.

It’s also much faster to be fully approved after you find a home.


This process takes longer, and you have to submit more documentation. However, you’ll have to do this work eventually to complete your home purchase. Doing it in advance allows you to proceed with more confidence, and makes the entire escrow go more smoothly.

How Do I Request A Pre-Qualification Or Pre-Approval?

Talk to Steve Gilbert at Seattle Mortgage Brokers today about getting on a new home loan today. Whatever you decide is right for you, Seattle Mortgage Brokers has the experience and dedication to get you from start to finish in as little time as possible. You can always reach out to us at 206-992-5635 or contact us on our webpage at today!


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*This article does not represent legal interpretation or advice. This is not a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet LTV requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines, and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over life of loan. Reduction in payments may reflect longer loan term. Terms of the loan may be subject to payment of points and fees by the applicant. Seattle Mortgage Brokers, LLC NMLS: LO# 305371 MB# 761615

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