Want to make a good first impression when you're shopping for a home? Two types of documents can help you do that: Mortgage pre-approval and mortgage pre-qualification.

Each one provides sellers and lenders with important information about your financial situation -- namely, how much you can afford to borrow and what you can afford to pay each month on a mortgage. These documents help them better guide you through the home-buying process. 

Here is a quick overview of the two processes so you can decide which one you should get.

A pre-approval involves the same steps as a complete mortgage application and is therefore a very thorough review of your ability to buy a home. Because of this, buyers obtain pre-approvals to demonstrate to sellers that they can afford the home and are serious home buyers. 

How to get pre-approved: To get a pre-approval, you'll basically need to go through the entire mortgage application process, including income and employment verification, as well as a credit check. The only major difference between a pre-approval and a completed mortgage application is that with a pre-approval, you haven't decided on a particular property yet.

Upon obtaining a pre-approval, you'll receive a letter stating that the bank is prepared to give you a loan for a certain amount. In addition to assuring you that credit and income won't be an issue later on, a pre-approval lets sellers know that you're a serious buyer and won't just make an offer and disappear.

Benefits of pre-approval:

  • You'll know exactly what you can afford.
  • It eliminates surprises after you choose a home.
  • Sellers will take your offers more seriously.

A pre-qualification is a less thorough process during which a lender will examine a prospective borrower's income and expenses in order to determine how much they could potentially borrow to buy a home. Usually, a pre-qualification is based on information obtained verbally (not verified) from a borrower, and it may or may not include a credit check.

Getting pre-qualified: Usually, a pre-qualification can be done online or in a few minutes by visiting a lender in person. It's not a very thorough process, and little or no documentation is necessary. 

Benefits of pre-qualification:

  • Tells you how much house you can afford.
  • Helps you determine your budget.


  • The information in a pre-qualification is unverified, so it carries little weight with sellers.
  • It's not a guarantee of your ability to obtain a loan.

The bottom line
If you want to be considered a serious buyer, pre-approval is almost always the way to go. Not only does it help during the shopping process, but it can also save time when you're trying to close on a home, as a lot of the application (credit check, income verification, etc.) will be complete already.

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