Pre-qualifications vs Pre-approvals. What's the difference? Main Treasure Valley Life

Buying a house is one of the biggest milestones in a person’s life. As such, there are a lot of steps to follow in the home buying process. One of the first steps is to secure a loan from a mortgage lender. This involves two steps: pre-qualifications and pre-approvals. This article will break down the differences between the two, as well as the steps to follow to get them and start shopping for a home!

What is a pre-qualification?

A pre-qualification is the first step in the home buying process. It serves as a rough estimate by your lender of how much you can afford to spend on a house. A pre-qualification is a great tool for your personal budget review. This can be done in a few minutes with your lender. All you need to bring is a list of debts, assets, and income. With this information, your lender will determine if you qualify to take out a loan based on your debt-to-income ratio.

Two important takeaway points:

  • Getting pre-qualified does not mean you are ready to buy a house. This step serves as an estimate for how much you could potentially borrow from the bank
  • This step is not required to get pre-approved for a loan from your lender. However, lenders often grant higher loan amounts to those who are pre-qualified first.

What is pre-approval?

Pre-approval is determining how much money you can actually borrow from the bank. Unlike pre-qualification, pre-approval takes a deep dive into your finances and financial history to determine your risk of defaulting on your loan. It is only after you get pre-approved that you can start shopping for a house. After all, why go shopping for something if you don’t know how much you can spend? Don’t go shopping for a Mercedes if you can only afford a Honda. In addition, sellers are much more likely to accept offers from buyers who are pre-approved for a loan because it proves that their offer is more genuine and the transaction process will be smoother.

What do I need to get pre-approval?

You must bring proof of income and employment. This includes:

  • Pay stubs from the last 30-60 days
  • W-2 forms from the last 2 years
  • Federal tax returns
  • If you are retired, include benefit reward letter and the last 2 years of 1099 forms and tax returns

You must also provide proof of assets, which includes:

  • Bank statements of all accounts with name of institution and account numbers. This includes checking, savings, Roth IRA, 401(k), and stocks.
  • If you are receiving help with paying for a house, include a gift letter with signature of the gifter and date of gift.

Bring proof of identification:

  • State-issued ID
  • Social Security card

Don’t worry about printing out or bringing your credit score. The lender will run a credit check for you. Be sure to check your credit score before your appointment to make sure of the number. If you want or need to raise your credit score, take steps to improve it before scheduling an appointment with a lender.

Do pre-approvals expire?

Yes. They typically expire after 60-90 days, but check with your lender for specific details. They automatically expire if there is a severe impact on your financial situation. This includes anything that will negatively effect your ability to pay the pre-approved loan amount:

  • Lost job
  • Financial hazard such as identity theft or fraud
  • New substantial debt

Are you ready to start your home buying journey? Contact our preferred lending partner to get started. Jill Cattano and her team at PRMG work tirelessly to get the most up-to-date information about the market, interest rates, and industry. They will walk you through every step of the pre-qualification, pre-approval, and approval process with impeccable knowledge and communication.

Get Financing or Verify You are Getting the Best Loan

Jill Cattano
Jill Cattano, Idaho Home Loan Professional
PRMG Boise Idaho Home Loans and Mortgage Specialists
Professional Loan Officer, NMLS#1609902
7950 Horseshoe Bend Rd #103 Boise, ID 83714


Paramount Residential Mortgage Group, Inc.
ID License Number MLO-21321

*VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit standards, and property limits. Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency. **Eligibility subject to program stipulations, qualifying factors, applicable income and debt-to-income (DTI) restrictions, and property limits. Copyright. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender.

Already pre-approved? Congratulations! Click here to start your home buying journey in Boise and the Treasure Valley.

Up next: Can your social media presence impact your credit score?

Posted by AndrewS at 1/24/2020 2:04:00 AM
Comments (0)
No comments yet, login to post a comment.


Michelle Penick, Build Idaho Client Real Estate Services

Michelle Penick

Client Care Team
208.629.0217 | [email protected]

Schedule Tour

Get a Community Recommendation

★★★★★ 5 stars - "Our experience with Full Sail/ Build Idaho was great from start to finish! "