What is a mortgage pre-approval and how is it different from a pre-qualification?
A mortgage pre-qualification is an informal assessment of how much a lender might be willing to lend based on general financial information you provide — usually income, debts, and assets. It involves no credit check and no commitment from the lender. It is a useful starting point but carries little weight when you make an offer.
A mortgage pre-approval is more rigorous. The lender reviews your income documents, pulls your credit report, and assesses your debt-service ratios against the stress test. If approved, the lender provides a written pre-approval for a specific maximum amount, typically valid for a set period (often 90 to 120 days). Some lenders also lock in an interest rate during that period.
A pre-approval does not guarantee final mortgage approval — the lender still must approve the specific property (by ordering an appraisal) and verify that your financial situation has not changed. But it significantly strengthens your position when making an offer because the seller (and agent) can see you have done the work. Get pre-approved before you start seriously searching.
Key takeaways
- Pre-qualification is informal; pre-approval involves document review and a credit check.
- Pre-approval shows sellers you are a serious, qualified buyer.
- Pre-approvals are typically valid for 90 to 120 days and may lock in a rate.
- The specific property still must be approved by the lender after your offer is accepted.