You’ve probably seen the ads or banners or billboards: “Get prequalified for a mortgage now!” Mortgage prequalification can be a useful thing, helping you get a handle on your homebuying budget, but it’s not a full commitment from the lender, or something you can use to start making offers on properties.

Here’s everything to know about mortgage prequalification, what it is, how to get it and how it differs from its soundalike, a mortgage preapproval.

What is mortgage prequalification?

Mortgage prequalification signifies that a mortgage lender has collected some basic financial information about you, and sometimes completed a credit check, to estimate how much house you can afford.

To prequalify for a mortgage, you’ll need to provide the lender with some information about your finances, including your income, any debt you have and basic details about your bank accounts. You’ll need to tell the lender how much you’re hoping to borrow, as well as how much you plan to contribute toward a down payment. If you’ve been through a bankruptcy or foreclosure, expect to be asked about that, too — depending on how long it’s been, the type of bankruptcy and other factors, you may or may not be eligible for a mortgage.

Discussing a prequalification with a lender from the outset can also give you the information you need to improve your credit or finances so that when the time comes, you might qualify for a bigger loan or better terms.

Prequalification is a fairly quick process, with information you’ll likely know off the top of your head. “Prequalification is an early step in obtaining financing,” says Will Reynolds, a real estate agent based in Nashville, Tennessee. “This is not a guarantee of a loan, but simply a first, but very important step, in the process.”

Applying for the actual mortgage will come later, after you obtain a loan preapproval and your offer on a property has been accepted.

Mortgage prequalification vs preapproval

For a prequalification, lenders generally take you at your word about your financial situation, rather than reviewing documentation (as they do with a preapproval or a formal mortgage application). A prequalification can help you get a sense of what you can afford, but it doesn’t guarantee you’ll get preapproved. Here are the key differences:

Mortgage prequalification explained

  • What you need to submit: Basic financial information about how much you earn, how much you want to borrow and how much you want to put down. Typically, a soft credit check is required.
  • How long it takes: Usually only a few minutes.
  • Why it matters: It can help you estimate how much house you can afford.

Mortgage preapproval explained

  • What you need to submit: A full under-the-hood look at your income, debt, bank accounts, tax filings and credit history/score.
  • How long it takes: In some cases, up to 10 days, although many online lenders offer preapprovals within a couple of minutes.
  • Why it matters: You’ll have evidence that you’re a serious buyer with financing lined up.

While these two terms sound similar, a preapproval generally carries greater weight and more detail about the loan you’ll be approved for. You’ll need a preapproval letter in hand before you even consider making an offer on a home.

A prequalification, on the other hand, can help you determine what price range of homes you should be considering, and many times there is no cost or fee involved. When you really want to buy a home, the preapproval letter provides more concrete proof that you can make the deal happen.

Getting preapproved tends to take more time than getting prequalified, too, because the lender asks for and examines proof of your income, assets and obligations. A lender will examine your financial statements, your tax returns and a range of other indicators that help assess your ability to repay the loan.

“Unlike prequalification, preapproval is a more specific estimate of what you could borrow from your lender and requires documents such as your W-2s, recent pay stubs, bank statements and tax returns,” says Reynolds. “The lender will then use these documents to determine exactly how much you can be preapproved to borrow.”

How to prequalify for a mortgage

While every mortgage lender is different, most prospective homebuyers seek a mortgage prequalification online or by phone. Most, if not all, of the information needed will be things you’ll know without much research, including how much money you make, where you work and your Social Security number.

The process is quick, too. Input everything, and you should have your answer within a matter of minutes. Given the speed of the process, you could get prequalified soon after deciding you want to buy a home.

Does getting prequalified affect your credit score?

It depends. Ask mortgage lenders how they structure their mortgage prequalification process and whether it will include a credit check.

When you’re comparing mortgage offers, credit checks are usually counted as one inquiry on your credit report, provided you apply within a 45-day window. If you’re shopping around for rate quotes from multiple lenders in that timeframe — which you should definitely do — it shouldn’t impact your credit.

Mortgage prequalification FAQs

  • A prequalification letter is a statement in writing from a mortgage lender that provides information about how much loan you might qualify for. It is not a firm commitment to lend, and can’t be used to verify financing when submitting an offer on a home.
  • Each lender sets different standards, but most prequalifications and preapprovals last anywhere from 30 days to 90 days.
  • You typically don’t need to provide documentation to get prequalified for a mortgage. Unlike a preapproval, a prequalification is an initial screening. You’ll likely need to fill out an online form or verbally answer questions, but you won’t need to substantiate the information you provide — that comes later in the mortgage application process.
  • If you’re not sure where to start with your homebuying budget, a prequalification is well worth getting. If you have a clear sense of your price range, have compared lenders and are ready to jump into the house hunt, you can skip the prequalification and get preapproved.
  • Once you’ve been prequalified and are ready to hunt for a home, get preapproved. Preapproval is more involved than prequalification and involves submitting documentation so your lender can assess your financial situation. Once you’re preapproved, you’ll be in a great place to start making offers on homes, submit your final loan application and complete the purchase.