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Texas Real Estate Commission Consumer Protection Notice

    Pre-qualification vs Pre-approval

    Sometimes these terms are used interchangeably, but they’re actually very different:


    This involves providing your lender with some basic information—what income you make, what you owe, what assets you have, etc. They’ll look at your overall financial situation and be able to provide you with a preliminary estimate of what loan terms for which you may qualify.

    When you get pre-qualified, the lender doesn’t review your credit report or make any determination if you can qualify for a mortgage—they’ll just provide the mortgage amount for which you may qualify. Pre-qualifying can help you have an idea of your financing amount (and the process is usually quick and free), but you won’t know if you actually qualify for a mortgage until you get pre-approved.


    This involves completing a mortgage application and providing the lender with your income documentation and personal records. You’ll usually have to pay an application fee, and the lender pulls and reviews your credit. A pre-approval takes longer than a pre-qualification as it’s a more extensive review of your finances and credit worthiness.

    Pre-approval is a bigger step but a better commitment from the lender. If you qualify for a mortgage, the lender will be able to provide: the amount of financing; potential interest rate (you might even be able to lock-in the rate); and you’ll be able to see an estimate of your monthly payment (before taxes and insurance because you haven’t found a property yet).

    Why get pre-approved? It saves you time by letting you search for homes within your pre-approved, affordable price range. Also, you’re letting sellers know you’re a serious and qualified buyer. Often, if there’s competition for a home, buyers who have their financing in place are preferred because it shows the seller you can afford the home and are ready to purchase. We’ll also go through the pre-approval process a bit more in the next section.