Key takeaways

  • Mortgage prequalification isn't the same as mortgage preapproval. A prequalification is a quick estimate of how much home you can afford, whereas a preapproval is a more thorough estimation based on evaluating your financial documentation.
  • Prequalification usually takes only a few minutes and doesn't require you to submit documentation to prove your income, debts and more.
  • Most prequalifications should not negatively affect your credit score because lenders run a soft credit check.

You’ve probably seen the ads or banners or billboards: “Get prequalified for a mortgage now!” Mortgage prequalification can help you know your homebuying budget. However, it’s a rough estimate, and you shouldn’t use it for making a home offer. Here’s everything to know about mortgage prequalification, including what it is, how to get it and how it differs from a mortgage preapproval.

What is mortgage prequalification?

Mortgage prequalification shows that a mortgage lender has estimated how much house you can afford based on basic financial information about you and a soft credit check.

To prequalify for a mortgage, you’ll need to provide the lender with financial information like:

  • Your income
  • Your debt
  • Your financial assets, like savings, checking, retirement and investment 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. The lender will also ask if you have a history of bankruptcy or foreclosure. Depending on how long it’s been, the type of bankruptcy and other factors, you may or may not be eligible for a mortgage.

A mortgage prequalification gives you the information you need to improve your credit or finances. This way, when you’re ready to apply for a loan, you might qualify for a bigger loan or better terms.

Applying for the actual mortgage comes after you obtain a loan preapproval and a seller accepts your offer on a home.

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 your income, where you work and your Social Security number.

“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.”

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

Mortgage prequalification vs. preapproval

With a prequalification, lenders take your word about your finances; they don’t require documented proof. A prequalification will give you a sense of what you can afford, but it doesn’t guarantee preapproval. More key differences between preapprovals and prequalifications include:

Mortgage prequalification explained

  • What you need to submit: Info on your income, how much you want to borrow and your down payment, plus submit to a soft credit check
  • How long it takes: Usually only a few minutes
  • Why it matters: Can help you estimate how much house you can afford

Mortgage preapproval explained

  • What you need to submit: Documents proving your income, debt, bank accounts, tax filings and more. The lender will also check your 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 carries greater weight. You should have a preapproval letter in hand before making an offer on a home. It provides more proof to the seller that you can make the deal happen.

A prequalification, on the other hand, can help you determine your price range for house hunting, and many times, you won’t need to pay a fee.

Mortgage prequalification FAQ

  • Typically, mortgage prequalification only involves a soft credit check, which doesn’t impact your score. Ask mortgage lenders how they structure their mortgage prequalification process and whether it will include a soft or hard credit check.

    When you’re comparing mortgage offers, hard 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 — your credit will only be affected by the first application.
  • A prequalification letter is a statement from a mortgage lender that provides information about how big of a 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 between 30 days to 90 days.
  • You don’t need to provide documentation to prequalify for a mortgage. Unlike a preapproval, a mortgage 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.
  • 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 prequalify for a home loan and are ready to house hunt, 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.