Pre-Approval vs. Pre-Qualification: How Are They Different?

Pre-Approval vs. Pre-Qualification: How Are They Different?

If you’ve done even the smallest amount of research on buying a home, then you’ve likely seen the words “pre-qualified” or “pre-approved” thrown around — especially if you’ve started vetting lenders.

Though the two terms might sound quite similar, pre-qualification and pre-approval are not, in fact, one and the same. Is buying a home on your radar?

Pre-Qualified vs. Pre-Approved

The main difference between pre-qualified and pre-approved is pre-qualification means the lender believes you will qualify for a loan. In contrast, pre-approval is a conditional commitment to loan you the money for a mortgage.

If you’re pre-qualified for a loan amount that falls within your budget, then it’s time to move on to the next step: pre-approval.

Let’s break down the differences — and what each process involves — in more depth.

What is a Mortgage Pre-Qualification?

Usually, you’ll get pre-qualified before you get pre-approved — it’s not required, though. Some people completely skip pre-qualification and go straight to pre-approval.

Pre-qualification is pretty simple: you provide some information about your income, debts, and assets, as well as the type of home you’re looking for, and the lender will evaluate your eligibility for a mortgage.

If you meet the minimum standards they’ve set, you’ll get a letter saying you’ve been pre-qualified for a loan. Depending on the lender, that letter may include a loan amount you’ve pre-approved for.

All the information you provide during pre-qualification is done via the honor system.

Does pre-qualification check credit?

During this process, lenders don’t verify your information or pull a hard credit report.

If you fib a little about your income or debts, you won’t come away with an accurate idea of your eligibility.

In fact, it could even mean pre-qualifying, putting an offer on a home, and then not being able to get that loan in the long run.

Because pre-qualification is not a guarantee of financing (or the final amount of that financing,) it is generally best reserved for:

  1. Gauging whether you’re qualified to purchase a home or not
  2. Getting an idea of how much you can spend on a home/how much you can afford

Generally, pre-qualification is done over the phone or via the web. You can usually get your pre-qualification letter in a matter of minutes.

Soft pull mortgage pre-approval

At Embrace Home Loans®, we offer pre-qualification via text message to make the process even easier.

Just text QUALIFY to 22722 and find out in seconds if you pre-qualify for a new mortgage or to refinance your existing one.

This is a soft pull that doesn’t affect your credit score.

What is a Mortgage Pre-Approval?

Pre-approval comes after pre-qualification and requires a bit more legwork on both your part and the part of your chosen lender.

During pre-approval, you’ll need to send over any required financial documentation and submit to a credit check.

The lender will pull your credit and analyze your financial health.

  • Do you have the ability to repay the loan (and do it on time, month over month)?
  • What debts are you already dealing with?
  • How much income is coming in?
  • Historically, have you proven to be a responsible debtor?

These are all things the lender will look at when evaluating you as a loan candidate.

The lender will pre-approve you if you’re eligible for a maximum loan amount and a specific interest rate. You’ll get a letter stating all these details, which you can then include with any offers you submit.

Once you get your pre-approval letter, you also may be able to lock in your rate, depending on the lender you’re using. This will keep you at the current interest rate you’ve qualified for until a set deadline. Rate locks are typically best if you’ve already found a property you’re interested in (or, at the very least, are close to doing so.)

If you’re working with Embrace Home Loans®, you also have other options — Approved to Move™ — which go a step beyond pre-approval. With Approved to Move™, you get a fully underwritten approval that’s good for 90 days and as close to a cash offer as possible.

This may give sellers more confidence in your offers and even put you ahead of the competition in a bidding war.

Does a pre-approval letter guarantee a loan?

Does a pre-approval letter guarantee a loan?


Pre-approvals are simply estimates of how much money lenders think you could borrow at their current rates.

What comes after pre-approval of the mortgage?

Once pre-approved, you can start looking at homes in earnest, knowing you’re ready to buy and how much the bank will finance.

You’ll also be able to take advantage of sellers who are willing to accept only pre-approved buyers.

Pre-Qualification or Pre-Approval: Which Do You Need?

As you can see, pre-qualification and pre-approval are very different animals. So which should you seek when buying a home is on your radar?

Ideally, both. Remember, though, that neither a pre-qualification nor a pre-approval are a commitment to lend.

Get pre-qualified first — in the initial consideration stages of buying a home. Use it to gauge whether you’re in the right financial place to qualify (and comfortably repay) a mortgage, and let the numbers the lender gives you guide your home search.

Remember that the loan amount may change once the lender fully evaluates your credit and financial health, so stay flexible and be ready to adjust your search once you’ve been pre-approved.

When you’re closer to actually buying a home, get pre-approved by the lender you think will serve your goals best.

Pre-approval, or Approved to Move™, can give you a leg up on the competition (which is especially important if you’re buying in a hot market!), and it can also speed up the mortgage approval process once you’ve put an offer on a home.

Which is Better, Prequalified or Preapproved?

Based on what you’ve read so far, it’s probably not surprising to learn that a pre-qualification letter is even less meaningful than a pre-approval letter.

If you’re truly interested in buying a home, it’s important to get an accurate picture of what kind of mortgage amount you can actually afford.

The best way to do this is with a prequalification letter from a lender — not just any lender, but an experienced mortgage professional who understands how much home loan money is available in today’s housing market.

This will give you an idea of how much house payment money you can realistically borrow, how much down payment money will be required, and other factors, such as taxes and insurance costs associated with buying homes in your area.

Ready to Get Pre-Qualified or Pre-Approved?

Want to see if you’re a good candidate for a mortgage?

Text QUALIFY to 22722 and get pre-qualified in seconds. Want to get pre-approved or Approved to Move™ and start your home search?

Then fill out our online application or get in touch with an

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Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.