Pre-Qualified vs. Pre-Approved Mortgages

Pre-Qualified vs. Pre-Approved Mortgages

They may sound similar but they’re very different. Real estate agents can tell you the difference in more depth, but in a nutshell:

  • A Pre-Qualified Letter gives you a general idea of how much of a loan you could qualify for. This is the first step in the process and is more of a ballpark figure estimate of what you would be able to afford. It’s largely for your own use as you start to initially browse homes on the market.
  • A Pre-Approval Letter is the next step in the process. This is a conditional commitment by a lender to grant you the mortgage if you decided to buy a home. This letter holds much more clout with real estate agents and sellers. In fact, in such a competitive seller’s market as this one, not many real estate agents will even show you a house until you show them a pre-approval letter first.


A pre-qualification, which as we said is based on data the borrower submits to the lender, is not a guarantee. Lenders won’t usually look closer at a borrower’s ability to obtain a mortgage until the pre-approval stage, which is when they will consider financial history and credit checks. This is a relatively quick process, taking just a day or two.

You will have to give your lender a few bits of financial information, such as debt, assets and income, which the lender will then review. What you get will be an estimate of how much you could expect to receive. Best part is, this can be handled over the phone or online, and it’s free.

What your letter will NOT have is a snapshot of your credit history, which is what sellers and real estate agents really want to know. During the pre-qualification phase, lenders will discuss your mortgage options. Think of this as more of a discovery phase or fact-finding mission, while pre-approval is when you’re getting serious enough to make a move.


This is the next step after the pre-qualification and is based on a lot more information and research into your ability to pay back a loan. It takes longer but it’s usually free as well. As the borrower, you will get a conditional commitment in writing from the lender for an exact loan amount. This tells agents and sellers how much you can afford, and is pretty much a sure thing. It holds a lot more water than a simple pre-qualification.

You’ll have to fill out an official mortgage application in order to obtain a pre-approval. At this time, you will also give the lender supporting documentation so they can conduct an extensive credit background and financial check. Your pre-approval will be up to a specified amount. What this means is that while the lender feels comfortable giving you a loan up to a certain amount, you do not have to hit that high-end number. Let’s say you’re pre-approved for $500,000 but only end up needing to borrow $450,000, that’s fine. The pre-approval process will also tell you a firmer interest rate that you may be charged.

It’s wise to have a pre-approval letter in hand when visiting open houses or showings, to assure the seller that you indeed have the funds to pay for the home.

Call Berkshire Hathaway Premier Properties

Let one of our experienced agents go more in-depth as to what the difference is between a pre-qualified mortgage and a pre-approved mortgage. Please contact Berkshire Hathaway Premier Properties today at 832-626-4889.

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