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The difference between pre-qualification and pre-approval

Papers, marker,books, laptop, and a key to a new homes for sale in Dublin, CA

A loved one learns that you’re planning to buy a house and sagely advises you to apply for pre-qualification. But you bump into another friend who says that getting pre-approval was the key to clinching their dream home.

While these two processes are often used interchangeably, they serve very different functions. However, pre-qualification and pre-approval both have the same goal: to give you an idea of how much home you can afford. 

To understand how each works—and what role they play in your home-buying journey—take a look at this quick guide we’ve prepared:


Simply put, pre-qualification gives you a ballpark estimate of how big a mortgage you can take out when buying Dublin, CA real estate. The operative phrase here is “ballpark estimate,” because the figure you get is based solely on preliminary data you provide—you won’t have to submit any paperwork or be subjected to background checks.

In fact, most pre-qualification requests can be done over the phone or even online. Simply call a lender, provide details such as your income, assets, and existing debt, then wait a few minutes to get a loan estimate. 

Why get pre-qualification? Getting pre-qualification is ideal for buyers who have yet to decide on a budget. Contacting a lender and finding out how much money you could theoretically borrow is a useful starting point.


Whereas pre-qualification indicates how much money you could borrow, pre-approval provides a more definitive figure. That’s because you can’t get pre-approval without completing an actual mortgage application first.

This means you’ll have to submit proof of creditworthiness, including pay stubs, credit reports, bank statements, proof of assets, and tax filings. You’ll also need to provide proof that you have a sizable down payment saved up.

The lender, in turn, will conduct a thorough review to ascertain your viability as a borrower. Unlike pre-qualification, this process takes around 10 business days to complete.

Why get pre-approval? If you already have a budget in mind, get a pre-approval letter to verify that you can indeed borrow that amount. Get an approval letter before looking at listings, so you don’t end up picking a house that’s beyond your financial means. 

Being pre-approved also gives you additional confidence when making an offer because you know your mortgage is essentially a lock. It also gives you an edge, as savvy sellers often won’t entertain offers from buyers who don’t have pre-approval.

What else should you know?

Pre-qualification or pre-approval from a Dublin, CA mortgage lender is valid for only 60 days. Taking out a new loan, charging a big purchase on your credit card, or starting another job within that time frame will likely invalidate your pre-qualification or pre-approval as your financial circumstances have changed.

Lastly, know that lenders tend to inflate the amount of money they will pre-qualify or pre-approve you for. Experts say that mortgage payments should be no more than 25% of your take-home pay.

Ready to take the plunge?

If you’re interested in homes for sale in Dublin, CA, give me a call at 925.216.0676 or send a message here to get started.