If you’ve decided it’s time to buy a new home, you’re going to need a mortgage.

The issue that a lot of people have is that it’s difficult to know how much money you need before you’ve actually found a home. On top of that, you might find that after you do find the perfect home, you aren’t able to qualify for the money that you need.


For many, the solution to this is getting pre-approved or pre-qualified for a mortgage. But what’s the difference?

Pre-qualification and pre-approval are different things, even if they sound similar. It’s important to know what each one is and how they can help you buy a home.




Pre-qualification is often the first step in getting a mortgage.

To get pre-qualified, you have to supply a lender with all of the details surrounding your financial  circumstances, including:

  • Income
  • Debts
  • Assets
  • Etc.


After submitting all of this information, a lender will be able to tell you how much money you’d likely be able to borrow. As such, pre-qualification can give you a good idea of your budget when house hunting. You don’t have to worry as much about being able to get approved for a loan large enough to purchase the house that you choose.

Keep in mind, though, that the amount given to you isn’t a sure thing. It’s the amount that you can expect, but different circumstances may change the amount that you are actually able to be approved for.


This process usually doesn’t take very long — a few days at most. It can be done on the phone or online in most cases. It also generally won’t cost you anything.

Lenders can work with you in this process to help you understand the different mortgage options that are available and help you choose the best one for you.


Pre-qualification letters are often required when you make an offer on a house. It tells the seller that you will likely be able to actually afford the offer that you put on the table.

Pre-qualification, however, does not carry the same weight as pre-approval.






Pre-approval is a more involved process than pre-qualification and includes a deeper look into your finances.

Pre-approval requires you to fill out an entire mortgage application, meaning you’ll be subject to a credit check and a background report.


After going through this process, your lender can pre-approve you for a certain amount. You may even be able to secure an interest rate, though that is not always the case.

You may be charged an application fee in the pre-approval process, which can be quite costly.


Pre-approval is more powerful than pre-qualification when making an offer as it gives the seller more confidence that you will have the funds available to make the purchase.



Which One is Right for You?

Buyers often take both steps when they enter the housing market. Pre-qualification can give them a good idea of how much they can afford, and pre-approval helps to narrow things down once they actually get closer to making a purchase.


Pre-approval has much more power behind it then pre-qualification is it means that you will be able to secure a certain amount of funding to purchase a home. You can always talk to your real estate to see what they recommend you do.