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  • Writer's pictureJeff Sorg

Mortgage Prequalification vs. Preapproval: Understanding the Difference

Updated: Mar 28

younger homebuyers talking to a mortgage broker

The house hunt is an exciting time, but navigating the world of mortgages can be confusing. Two terms that often trip up buyers are prequalification and preapproval. While they may sound similar, their differences hold significant weight in home-buying. Let's break down the key differences between a prequalification letter and a preapproval letter for a home mortgage.

Prequalification: A Starting Point

Think of a prequalification letter as an estimate. Based on the information you provide about your income, debts, and employment, a lender can give you a ballpark idea of how much you can borrow.

  • Fast and Easy: Prequalification often involves a quick online form or conversation with a lender.

  • Unverified Information: The lender relies on the information you give them without verifying it with documents.

  • Limited Weight: A prequalification letter holds little weight with sellers. It doesn't guarantee approval for a loan.

Preapproval: Getting Serious

A pre-approval letter is a stronger signal to both you and the seller. It involves a more thorough review of your financial health:

  • Deeper Dive: The lender verifies your income with pay stubs and tax returns, checks your credit report, and examines your assets and liabilities.

  • Conditional Commitment: Once verified, the lender issues a pre-approval letter stating the maximum loan amount you're likely eligible for, subject to some conditions.

  • Stronger Position: A preapproval letter shows sellers you're a serious buyer with the financial backing to secure a mortgage.

Choosing the Right Path

Prequalification can be a helpful initial step to understanding your affordability range. However, a preapproval letter is the gold standard when making offers and competing with other buyers.

Here's a quick guide:

  • Use prequalification for initial budgeting and getting comfortable with the mortgage process.

  • Get pre-approved before seriously house hunting. This strengthens your offer and gives you peace of mind.


  • Shop around for lenders and compare rates before getting preapproved.

  • The information in your preapproval letter is only valid for a specific timeframe, typically 30-60 days.

With a clear understanding of prequalification and preapproval, you can confidently navigate the mortgage process and land your dream home!


(C) 2024 Jeff Sorg


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