What’s the Difference Between Pre-Qualified and Pre-Approved?

If you’re thinking about buying a home, you’ve probably come across the terms pre-qualified and pre-approved. They sound almost the same, right? Surprisingly, they mean two very different things. Knowing the difference can help you feel more confident as you start your home buying journey.

What does pre-approval mean?

Pre-approval takes things a step further. This is when you fill out a full mortgage application and provide documents to back up your financial info, like pay stubs, bank statements and tax returns.

Your lender will then review your credit history and financial background in detail. If everything checks out, they’ll tell you exactly how much you’re approved to borrow and what interest rate you qualify for.

Getting pre-approved is a big deal — it means you’re a serious buyer. You can start shopping for homes within your approved price range, and sellers will see that you’re ready to make a strong offer.

Key differences

Here’s a quick breakdown:

• Mortgage application: Pre-qualification doesn’t require a full application. Pre-approval does.
• Fees: Pre-qualification is usually free, but pre-approval may include a small application fee.
• Financial check: Pre-qualification doesn’t include a credit check. Pre-approval does—and it’s thorough.
• Goal: Pre-qualification helps you understand what you might qualify for. Pre-approval confirms what you can qualify for.
• Down payment: You won’t need to talk about your down payment during pre-qualification, but you will during pre-approval.
• Loan amount: Pre-qualification gives you an estimate. Pre-approval gives you a specific number.
• Interest rate: You won’t learn about interest rates during pre-qualification, but you will once you’re pre-approved.