What is the difference between Pre -Qualification and Pre-Approval?

Pre-Qualification

• An initial assessment of a buyer’s ability to purchase a home

• Usually based on self-reported financial information (income, debts, assets)

• Does not involve a credit check or document verification

• Gives a rough estimate of what a buyer might be able to borrow

• Often used as a first step to understand home buying potential

Pre-Approval

• A more formal process involving a lender

• Requires submission of financial documentation (such as pay stubs, tax returns, and credit check)

• The lender verifies the buyer’s information and issues a pre-approval letter, stating how much they are willing to lend

• Demonstrates to sellers that the buyer is financially qualified and serious.