Pre-Qualification vs. Pre-Approval – What’s the Difference?

When you’re thinking about buying a home, one of the first things you’ll probably hear is that you need to get pre-qualified or pre-approved. They’re both important steps in the homebuying process – but what’s the difference? 

In short, pre-qualification takes a broad look at your financial situation to provide an estimate of the loan amount you might qualify for, while pre-approval is a more in-depth inspection of your financial information to make sure you’re ready to take the loan on. They’re similar on the surface, but serve different purposes – keep reading to learn how.

What is Pre-Qualification?

When you’re thinking about buying a home, one of the first things you’ll probably hear is that you need to get pre-qualified or pre-approved. They’re both important steps in the homebuying process – but what’s the difference? 

In short, pre-qualification takes a broad look at your financial situation to provide an estimate of the loan amount you might qualify for, while pre-approval is a more in-depth inspection of your financial information to make sure you’re ready to take the loan on. They’re similar on the surface, but serve different purposes – keep reading to learn how.

What is Pre-Approval?

Pre-approval is step two in the homebuying process, and while it’s similar to pre-qualification, it’s more involved. Your lender will perform an extensive credit and background check to make sure you can take on the loan. You’ll need to provide proof of financial information using things like pay stubs and bank statements. The lender will obtain your credit score through a “hard pull” from all three credit bureaus, and verification of employment will be required.

Should I Get Pre-Qualified or Pre-Approved?

If you’re just starting to think about buying a home, getting pre-qualified is a great way to figure out how much you might be able to borrow. If you’re a little further into the process and ready to go shopping, pre-approval can serve as the next step towards purchasing your dream home. 

If you’re ready to get pre-qualified or pre-approved, or just need a little more guidance about which one is the right choice for your situation, our team of lending experts are ready to guide you through the process and answer any of your questions.