It’s important to get pre-approved for a mortgage before you shop for a home, but sometimes the terminology is confusing. Understanding the difference between pre-qualification and pre-approval is important in assuring you have a strong purchase offer that is more likely to be accepted. 

Pre-Qualified, Pre-Qualification

Loan pre-qualification does not typically include an analysis of your credit report or an in-depth look at your true ability to buy a home.

You can be pre-qualified by a lender, by a real estate agent or you can do it yourself. The term means that someone has taken a general look at your income and expenses and plugged them in to a debt to income ratio formula.

Pre-qualifying yourself before you start looking for a home gives you a general idea of the price range you can afford. It will not nail-down an interest rate for you, and that factor and others affect the monthly payments a bank will allow you to make.


When you are pre-approved for a mortgage, it means a lender has looked closely at both your credit report and your income and determined that you qualify for a loan. The lender will tell you the maximum amount of loan it will make, which loan programs you qualify for, and will discuss the interest rates it will offer for different types of loans.

When you’re pre-approved you can go shopping for a home with confidence about your buying power, but it still isn’t a guarantee that the lender will approve the loan.