Pre-Approved or Pre-Qualified for a Mortgage: Which One Is Better?

Probably the greatest methods to make your provide extra engaging when buying a house is to come back ready with both a preapproval or prequalification letter. Doing this exhibits the vendor that you just aren’t simply considering shopping for the house — you’ve additionally bought the monetary backing to take action.

Being preapproved and prequalified for a mortgage offers you an concept of how a lot you may spend on a home and present sellers that mortgage lenders are keen to mortgage you the cash for the house.

However whereas the aim of prequalification and preapproval are comparable, the 2 aren’t fairly the identical. Preapproval requires offering extra info to a lender and exhibits you to be a extra creditworthy purchaser, and there are different variations value noting, too.

What’s a prequalification on a mortgage?

Prequalification is among the first steps within the homebuying course of. Not like preapproval, which requires offering detailed monetary info, prequalification is only a snapshot of your total monetary image. Potential lenders will have a look at your total monetary scenario, together with revenue and present debt.

The method for prequalification sometimes received’t require you to supply detailed monetary data or bear a credit score verify. It may take anyplace from a couple of minutes to a couple days to finish the prequalification course of, although the precise timeline will rely on the lender.

Utilizing the knowledge you present, a lender provides you with an estimate of how a lot you may borrow. Prequalification is a useful gizmo early within the homebuying course of, as it will possibly assist information patrons to properties inside the precise worth vary. It additionally sends a constructive sign to realtors and sellers that you’re on observe to get funding for the house. They could be extra keen to work with you and think about your provide since a lender has deemed you creditworthy, at the very least based mostly on essentially the most primary info.

[ Read: 7 Tips for Finding the Best Mortgage Lenders ]

Nonetheless, it’s essential to notice that prequalifications are preliminary, and there’s nothing to ensure a lender will truly offer you that quantity. As a result of the prequalification course of doesn’t essentially require a credit score verify or concrete monetary data, lenders could change their tune if the knowledge you initially offered doesn’t completely align with what your paperwork present. For that motive, a prequalification letter isn’t prone to carry fairly as a lot weight with sellers.

What’s a preapproval on a mortgage?

A mortgage preapproval is the method a lender requires of a borrower to assist determine whether or not to increase a mortgage mortgage and decide how a lot it’s keen to lend. Consider preapproval as the following step within the mortgage course of after prequalification — it requires that you just present extra monetary info to the lender however leads to a extra definitive willpower of your creditworthiness.

To safe mortgage preapproval, you’ll possible want to supply the next info:

  • Proof of revenue and employment within the type of paystubs for the previous 30 days 
  • W-2s and tax returns for the previous two years
  • Proof of belongings within the type of financial institution statements
  • Proof of creditworthiness within the type of a credit score verify

As a result of it requires extra fact-checking on the lender’s half, preapproval takes a bit longer than prequalification. Whereas prequalification might be accomplished on the identical day, preapproval can take anyplace from a couple of days to a couple weeks, relying on the lender and the knowledge you’ve offered.

Preapproval letters are sometimes good for a selected variety of days. For instance, a lender would possibly promise to honor the preapproval so long as you purchase a house inside 90 days. Because of this, it’s finest to safe your preapproval letter additional alongside within the course of or once you’re prepared to really purchase a home.

What’s the distinction?

Mortgage preapproval and prequalification are comparable, however they require totally different info, and persons are prone to do them at totally different steps in the course of the homebuying course of.


You’ll want totally different info for a mortgage preapproval vs. prequalification. Getting prequalified doesn’t require a lot documentation. You’ll inform the lender about your revenue, debt and belongings. It’s all self-reported — they usually in all probability received’t confirm the knowledge or run a credit score verify.

Preapproval, however, requires much more info. Your lender will ask for pay stubs and tax returns to confirm your revenue and employment. The lender can also contact your employer. You’ll additionally want to supply proof of your belongings within the type of financial institution statements. Lastly, the lender will run a credit score verify.


Prequalification and preapproval can present a vendor that you just’re severe about shopping for, however preapproval carries extra weight. Prequalification doesn’t require a lender to confirm all the info, so it’s simpler to show to the vendor that you could get a mortgage in case you provide a preapproval as an alternative.


You possibly can search prequalification at any time. Even in case you aren’t planning on shopping for a house for a yr or two, you need to use a prequalification to get an concept of the finances you must keep inside. Preapproval letters are sometimes solely assured for 60 to 90 days, that means you must wait till you’re prepared to purchase to finish the method.

[ Read: 6 Ways to Make Your Mortgage Application Easier ]

Which one do you have to go for?

Prequalification and preapproval can each be precious instruments in serving to you to find out how a lot home you should buy. In addition they sign to house sellers that you just’re in a position to safe financing from a lender. In the end, they’re applicable for 2 totally different conditions.

Prequalification is ideal for individuals who are simply beginning the shopping for course of. Consumers who’re simply getting began could also be uncertain of how a lot house they’ll afford. Prequalification may also help them to set parameters within the house search.

Realtors could ask their purchasers to get prequalification. This helps them enable you higher and exhibits them that you just actually intend to make a purchase order. Should you discover that good house, your prequalification letter may also help give your provide some weight.

Preapproval is a greater transfer for individuals who are additional alongside within the shopping for course of. You would possibly search preapproval in case you’ve finished your preliminary buying, have a selected finances in thoughts and really feel able to make a purchase order.

Should you anticipate to purchase a house shortly, you may skip the prequalification course of and go straight for preapproval. It’s essential to not get pre-approved too early within the course of since lenders sometimes solely assure preapproval letters for 60 to 90 days.

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