Do you know the difference between the pre-approval vs. pre-qualification process for home loans? Establishing a relationship with a lender before you begin house hunting helps you compete in a competitive housing market. Here’s why completing a home loan application should be your first step in buying your dream house.

On the surface, pre-approval and pre-qualification don’t seem very different. Although these two home loan terms sound similar, there are substantial differences.

Pre-Approval vs. Pre-Qualification

Let’s look at the roles pre-qualification and pre-approval can play in your homebuying journey.


Mortgage pre-qualification happens when a lender guesses how much of a home loan you can obtain. Important things to know about a mortgage pre-qualification include the following:

  • The lender gives you an estimate based on your answers to a few questions
  • The mortgage lender isn’t promising to provide you with a loan in the estimated amount
  • You’ll still complete a home loan application and go through the approval process

Think of loan pre-qualification as the first chat with a lender. The mortgage specialist asks you a series of income-related questions to find a ball-park guess as to your loan eligibility. Keep in mind that the lender isn’t guaranteeing that you’ll qualify for the estimated loan amount. Why should you bother with a pre-qualification if it’s not binding? One reason to seek out a pre-qualification is that it gives you a chance to interview multiple lenders. There is a vast array of mortgage lenders in the market, and you should choose the one that fits your needs. You’ll also come away with a basic idea of how much house you can afford. Although it’s an estimate, use the dollar amount to narrow your house search.


Home loan pre-approval differs from pre-qualification in several essential ways. The most significant difference is that a pre-approval letter is a binding commitment from the lender. Barring an extraordinary circumstance, you will receive a mortgage up to a specified maximum amount.

Of course, obtaining pre-approval vs. pre-qualification takes more effort on your part. Prepare to complete a significant amount of paperwork detailing all areas of your finances. The mortgage lender will ask you to show:

  • Official identification (driver’s license, state-issued ID)
  • Copy of your Social Security card
  • Bank statements
  • Proof of additional income (e.g., Pension, Child Support)
  • Tax returns
  • W-2 and 1099

All the above documents prove your income. However, a lender also wants to know about your debts. Your debt-to-income ratio is a crucial part of a lender’s decision on whether to grant you a pre-approval.

A financial institution also examines your credit score as part of your pre-approval application. There’s no denying that a high credit score will give you more profitable mortgage opportunities. However, there are plenty of home loans available for borrowers with less than flawless credit ratings.

A pre-approval letter makes it much easier to search for a new home. Indeed, possessing home loan pre-approval is practically essential in competitive housing markets.

House Hunting with Pre-Approval in Hand

Trust us: hunting for a home in your ideal Lane County community is less stressful with a pre-approval letter. You’ll have the stress reduction that comes with the promise of a mortgage up to a specific price. Knowing your maximum budget prevents the heartache that comes with loving a house you can’t afford.

The benefits that a pre-approved mortgage gives you don’t stop with knowing your budget. Having a pre-approved mortgage application gives you significant power during your house

Did you know that real estate professionals often want to see a pre-approval letter before showing you any homes? It makes sense as there is no reason to look at homes beyond your actual price range.

Once you find a home, pre-approval makes it more likely that a seller will take your offer. The seller wants a solid promise that you can get a mortgage when accepting your purchase offer. The surest way to assure the seller that the sale will go through is to include a pre-approval letter with the proposal.

Reassuring a seller that you can finance the purchase gives you an edge when there are multiple offers. Amazingly, the majority of buyers don’t include a pre-approval letter with their offer. This fact puts you in a stronger negotiating position with many homeowners.

Taking the time to work with a lender before you check out properties is a smart decision. You’re more likely to experience a smooth homebuying process when you work with a lender to get pre-approved.

Last Thoughts

Lastly, buying a home in the Eugene area is an exciting and stressful experience. You can reduce your stress and increase the chance that you’ll find a house by meeting with a lender early on. Your mortgage associate will guide you through the ins and outs of the pre-approval vs. pre-qualification process.

Strategic Mortgage Solutions excels at helping our clients finance homes in the Eugene, OR metropolitan area. Contact us today for help with purchasing your dream home.