Prequalified vs. Preapproved: What’s the Difference?

Whether you should get prequalified or preapproved for a mortgage depends on where you are in your home buying journey. A prequalification is great when you’re just starting out and want to get a jump on planning. A preapproval, on the other hand, is a much stronger way of knowing where you stand and what types of home loans you qualify for. Plus, it shows sellers that you are an approved buyer ready to act.  

Learn more about the difference between prequalified vs. preapproved and which one is right for you. 

Key takeaways 

• Prequalification is an early step in the home buying process that uses information you provide for a quick estimate of what you could borrow. 
• Preapproval requires documentation about your income and credit, but it gives a more accurate picture of your borrowing power.  
• Preapproval carries more weight with sellers, showing them you qualify with a lender to make a solid offer. 
• Whether you need prequalification or preapproval depends on whether you’re just beginning to explore options or are ready to make an offer on a home. 

What does it mean to be prequalified for a mortgage? 

Getting prequalified is an early step in the process to get mortgage-ready. It’s a quick, casual screening that gives you a rough idea of what you might be able to afford. You provide some details about your income, and the lender provides an estimate of how much you could potentially borrow.  

Prequalification is not a commitment to give you a loan. That’s because it uses self-reported information instead of verifying your financial situation through documentation. Still, it’s a good way to gauge your buying power early in the process. Prequalifying doesn’t lock you in with a particular lender, either, so you’ll still be able to shop around for a home loan. 

How to get prequalified for a mortgage 

Getting prequalified for a mortgage is usually pretty quick, and you can do it online with most lenders. You’ll need to provide some information about yourself, your finances, and your location, such as: 

• Name 
• Date of birth 
• Contact information, including phone number and email address 
• The city and state where you’d like to purchase, or your home address if it’s for a refinance 
• Estimated purchase price of the home 
• Estimated down payment (in dollars or as a percentage of the purchase price) 
• Gross annual income 
• Monthly debts 
• Whether you’ve owned a home in the last three years or served in the military (to see whether you might qualify for special loan programs) 

You won’t need to upload any documents for a prequalification. The lender may run a soft credit check using the information you provided, so there won’t be an impact on your credit score. Then they’ll present you with an estimate of what you could borrow. 

What is mortgage preapproval? 

A mortgage preapproval is more involved than a prequalification. It basically takes you through the mortgage application process, including documentation and a hard credit check.  

It’s important to get preapproved so you have a clear picture of what you can afford to spend on a home. You can use a preapproval to narrow down your price range and get a firm idea of what your interest rate and monthly payment would be, too. Getting multiple preapprovals could also help you comparison shop different lenders.  

Because the lender has reviewed your actual finances, a preapproval carries more weight, especially as you’re ready to make offers. It shows buyers that you’re serious about the purchase and that you have the means to close the deal. It also speeds up the loan process when you formally apply, because the lender already has your documentation. 

How to get preapproved for a mortgage 

You’ll need the following documents to apply for a mortgage preapproval: 

• Name and contact information 
• Social security number 
• Date of birth 
• W-2 
• Pay stubs 
• Employer information 
• Bank statements 
• Tax returns 
• Loan statements 
• Statements for retirement and investment accounts 
• History at your current address or rental history 

The lender will also run a hard credit check, which could temporarily drop your credit score by a few points. If you plan to get more than one preapproval, try to request them all within 90 days so that it appears as one inquiry on your credit report. 

At a glance: Prequalified vs. preapproved 

Choosing between preapproved vs. prequalified will depend on where you are in the home buying process and what your goals are today. If you’re still saving but want to see how far your budget might go, prequalifying can help without harming your credit. If you’re prepared to start making offers in the next couple months, preapproval could set you up nicely. 

	Prequalified	Preapproved
Credit impact	Soft credit pull	Hard credit pull
Documents required	None	Proof of income, identity, and assets / debts
Application fee	None	May be a fee
Loan amount and rate	Estimated	Specific
When to use it	Just starting out	Ready to buy

When should you get prequalified vs. preapproved? 

With a mortgage, prequalified vs. preapproved comes down to whether you’re just starting out or ready to buy. If you’re serious about buying a home and want to show sellers you’re ready and qualified for a loan to buy a home, a preapproval is the better move. 

Get prequalified when: 

• You’re casually exploring options 
• You’re just beginning the home buying process 
• You don’t want a hard inquiry on your credit report yet 
• You don’t know how much you can afford 
• You want to narrow down your lender options 
• You don’t mind receiving a ballpark figure 

Get preapproved when: 

• You want to begin touring homes 
• You want to know exactly what to expect 
• You want sellers to view you as a serious buyer 
• You want to make and win offers 
• You’re prepared to apply for a loan 
• You’re ready to negotiate with a seller 

The buying power of Certified Approval 

Mortgage preapproval is a useful tool to have when shopping for a home. AmeriSave goes one step further, offering Certified Approval that shows sellers your buying power is verified. It’s a great way to stand out in competitive markets and show sellers that you’re ready and able to close the deal.  

You can get a Certified Approval from AmeriSave online by providing a few financial documents, such as your W-2s and bank statements. You’ll receive detailed information about your borrowing power, including a loan amount and estimated payments. With your preapproval in hand, you can make strong offers as a verified buyer and have the peace of mind that your finances have been reviewed. 

Get your Certified Approval today and shop for your new home with confidence. 

Frequently asked questions 

What is the difference between prequalified and preapproved? 

In general, a prequalification is an informal estimate of how much you could borrow based on information you provide to the lender. A preapproval is more accurate because the lender reviews your income, assets, and credit history to decide how much they would lend. 

Why is it important to know about prequalification before applying for a mortgage? 

Prequalification gives you a rough estimate of how much you might be able to borrow to buy a home. Getting prequalified before applying for a loan helps you avoid shopping for homes that are out of your price range and can help you research your loan options.  

Do prequalified and preapproved offer the same benefits?

No. A prequalification offers only an informal estimate of what you can afford, while a preapproval provides a more concrete picture of what you’re approved to borrow. Preapprovals also carry more weight with sellers, giving you an edge in negotiating. 

Can I get a mortgage with only a prequalification? 

Even if you only get a prequalification, the lender will still need to underwrite your application. That involves a detailed review of your income, assets, debts, and credit history. Getting preapproved can streamline that process by providing your documentation upfront. 

What documents are needed for preapproval? 

The lender will request your pay stubs, bank statements, W-2s or other tax forms, Social Security card, ID, and loan statements for other debts you have. They may also want verification of employment and rental history, or business documents if you’re self-employed.