What’s the Difference Between Prequalified and Preapproved?

Jeff Peterson
Jeff Peterson
Published on May 1, 2017

Buying a home is a very exciting, stressful, and confusing time for most people. If you’ve never bought a home before or if it has been many years since you bought a home, the loan process can seem overwhelming.  One common issue that homebuyers get confused about is the difference between being prequalified and preapproved for a home.

Many home buyers will use the terms prequalified and preapproved interchangeably but they are not exactly the same thing.


A lender will ask for many different pieces of information to determine how much home you can afford by paying in monthly installments and how much money they will lend to you.  Being prequalified means that your lender has given you an estimate of the amount that you can afford based on the information you given him or her.  They get this information based you telling them your income, debts, assets, and credit scores. 

Being prequalified is not a guarantee from the lender that you will be approved for a loan.  It is an unofficial letter based on limited information, that says you could be loaned up to the prequalified amount, if all your information is deemed accurate upon an in-depth look into your financial situation.   

Basically, being prequalified is a rough estimate on what you can afford so you have an idea of how much house to look for.  If you are prequalified for $200,000, you do not want to be out looking at houses priced at $400,000.

As your Realtor® I will ask to see your prequalification letter from your lender so that I can be assured there is legitimacy to your wanting to look at homes.  If you do not have a lender or are just starting the process, I will gladly recommend some lenders that I have worked with in the past. 

The prequalification process is actually quite easy and can be done very quickly.  Most lenders will provide a prequalification letter from information over the phone, email, or by filling out their online prequalification information.


Being preapproved for a loan is more formal and involves a more detailed look into your finances.  We now know that a prequalification is an estimate based on what you tell the lender. Getting a preapproval involves the lender obtaining records of your income history by getting copies of your paystubs, W2’s, income tax returns, bank statements, assets (savings accounts, investments, etc.), and a detailed credit check. W-2s for the previous two tax years

By obtaining the documents listed above, along with the lender’s own research, this will give him or her the information they need to be more confident about loaning you the money you need.  However, just because you have a preapproval from a lender, this is not a guarantee that they are going to lend you the money.

Preapprovals are more accurate than prequalifications since the lender worked on verifying your creditworthiness.  However, a preapproval is not a final mortgage approval from the lender.  The reason being, during the time between the preapproval process and the date you close on your house, your finances could change.  Or there could be a problem with the inspection, appraisal, or any number of issues that could come up.  One thing to note… do not buy anything on credit during the time you are preapproved and when you close on your house.  That could mess up your entire loan.  No new credit cards, no new vehicles, and try not to change jobs during this time. 

Another thing to note about preapprovals, they can expire.  It is important to hit the ground running when you have a preapproval from a lender so that it does not expire.  If you do not find a house before your preapproval expires, you will have to start the entire process over again! It is best to avoid repeated preapprovals for a couple of reasons. First of all, the process takes some time and can be a big inconvenience to you and your lender. Second, every time your credit report is inquired about, it can affect your credit score for the worse.  Even a small decrease in your credit score could render you unable to be approved for a loan.


Getting approved from a lender is just one step in the process of buying a house.  I’ve written another blog that you can read about the steps to buying a home.  

If you have any questions about the process of getting prequalified, preapproved, and actually approved for a loan, please do not hesitate to ask me.  And just to set your mind at ease, check out this link of top questions from home buyers.  I look forward to helping you find your dream home!

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