Do You Need Both? How Are They Different?

Buying a house is a lot more complicated than finding one and making an offer. There are steps you'll need to take before you even begin house hunting, which can include mortgage pre-qualification and pre-approval.

Both prequalification and preapproval are helpful steps to take during the home-buying process. But are both necessary? Is one better than the other? Is one more suited to your specific needs? Learn more today so that you can set yourself up for success!

Get Free Quotes


Mortgage "prequal" (pronounced pre-kwall) is an informal assessment of how much house you can afford and sheds some light on your creditworthiness. When you prequalify for a home loan, you show that you meet the minimum requirements of the lender. Prequalification can also help you get a feel for the amount of money that you may be eligible to borrow.

Is Prequalification Right for Me?

Prequalification can be very helpful in narrowing down a budget. If you are not sure of your financial standing or are having difficulty figuring out just how much of a loan you'll need, this step is extremely beneficial.

Don't start shopping for a house until you know exactly how much you can afford!

What Is Evaluated During Prequalification?

Basic information is reviewed during prequalification, including:

  • Your credit score
  • Your income
  • Any debts you have
  • Assets

Typically, the borrower provides the answers to the lender's questions, rather than the lender examining documents itself.

Does Prequalification Hurt My Credit Score?

Since the information provided during prequalification is usually self-reported, it shouldn't impact your credit score. But never assume something won't impact your rating, because lenders are all different! Make sure you are very clear on their specific prequalification process. If they ask to see any documents or request to verify information, ensure that your credit score won't take a hit from any inquiries they plan on performing.

How Long Does Prequalification Take?

Since prequalification is an informal evaluation that could be done over the phone or even online, you could prequalify for a mortgage in a matter of minutes! That means that those in the market don't have to wait weeks to start house hunting. A buyer could have a better indication of how much house he or she can afford the same day they request to prequalify.

Mortgage Preapproval

Preapproval is similar to prequalification in that it is examining your financial situation and determining how much you may be able to borrow.

It is different in that mortgage preapproval requires proof of the information you give, so you'll have to submit documents that show your:

  • Income
  • Assets
  • Debts

And the lender may or may not request a credit check too. When you are preapproved for a mortgage, you are as close to securing a loan as you can be without having a written contract in place.

Is Preapproval Right for Me?

While not every buyer chooses to get prequalified for a loan, most decide to get preapproved. Why? Because since your finances have been more carefully evaluated, it's a much more accurate assessment of the amount you'd be able to borrow. The lender will typically issue you a preapproval letter that is valid for a period of time.

That approval letter can greatly assist in your quest to find a home, as it attests to your creditworthiness and shows you are a serious buyer. The difference between securing your dream home and missing out could be that preapproval letter.

What Is Evaluated During Preapproval?

Any document that sheds light on your financial stability could be evaluated during the preapproval. This includes:

  • Tax returns
  • Employment documents, like W-2s
  • Retirement accounts
  • Rent payments
  • Divorce information

The lender may request additional documents to further prove your financial stability.

Does Preapproval Hurt My Credit Score?

It depends. Here's where it can get muddled, so you'll need to ensure you understand the type of credit check the bank or lender is performing.

It is possible for the lender to do what's called a "soft credit check." These minimal inquiries do not impact your credit score. A hard credit check, however, does impact your score, so you'll want to be mindful of how many hard credit checks are being performed when you're shopping for a mortgage.

Do all of your hard credit checks within a short amount of time of each other so that you can make use of rate shopping, which can count all inquiries as one.

How Long Does Preapproval Take?

Because getting preapproved requires the submission and evaluation of financial documents, it can take a few days or even a few weeks to get preapproved for a mortgage.

Tip: to speed up the process, make sure you have all financial documents organized and ready to be reviewed before you start looking for a lender.


Mortgage prequalification is a great step for first-time homebuyers who would like a better idea of how much they can afford. Mortgage preapproval is a step that most serious buyers take, as it gives you a competitive edge when shopping.

Ready to get your buying process started? Lendgo connects you with top lenders so you can easily compare all of your different options. Start rate shopping now!

Get Free Quotes