BuyerFirst Time Home BuyersReal Estate May 6, 2024

Differences Between Pre-Qualified and Pre-Approved

It can be difficult to understand real estate jargon when it’s your first time purchasing a home. If you are in the process of purchasing or considering buying, we are here to help. One of the biggest misconceptions has to do with understanding the differences between pre-qualified and pre-approved when applying for a home loan. So, we took the question to the pros! We connected with Michelle Schmidt, a lender with Movement Mortgage. Michelle explained that while, “pre-approval and pre-qualified sound similar, they have significant differences when it comes to securing a loan or line of credit.” Are you ready to explore some of those differences with us?


  • Initial estimate: Based on basic information you provide, like income and debt, the lender gives a rough idea of the loan amount you might qualify for.
  • Less rigorous process: No formal application or documentation required, often done online or with minimal verification.
  • Not a guarantee: Not a firm commitment from the lender. Your actual approval may differ depending on further verification and credit checks.
  • Lower commitment: Can be helpful for budgeting and narrowing down your search, but less persuasive to sellers or lenders.


  • Formal commitment: Requires a full application and credit check. The lender verifies your income, assets, and debts. Generally, will also run your file through underwriting.
  • More specific: You receive a pre-approval letter stating the exact loan amount, interest rate, and conditions you qualify for, under specified circumstances.
  • Stronger leverage: Makes your offer more competitive to sellers, as it shows you’re a serious buyer with proven financing ability.
  • Higher commitment: Requires more effort and may involve a hard credit inquiry affecting your credit score slightly.

Here’s when to choose each:

  • Pre-qualified: Start your research, understand your potential borrowing power, and set budget limits.
  • Pre-approved: When you’re serious about buying and want to make competitive offers or secure specific rates.

Michelle says, “In short, pre-qualified is like a preliminary assessment, while pre-approved is a conditional guarantee”. When planning to buy, it is important to assess your financial positioning. A lender can help you ensure your finances align with your home ownership goals. Talking with a lender early on can help you set your goals in motion and can help you feel confident in your purchase when you are ready to buy. When you are ready, getting your pre-approval is of the utmost importance. Your pre-approval letter demonstrates to the seller your seriousness about purchasing a home. It shows that you have done the legwork and is proof that you can purchase the home.

If you have any further questions about the differences between pre-qualified and pre-approved or any other loan or real estate term don’t hesitate to reach out to Michelle Schmidt, your own trusted lender, or get connected with one of our realtors if you are not currently working with your own by clicking here.