Pre-qualification is like dipping your toes into the home-buying process. It’s a preliminary assessment where a lender estimates how much you might be able to borrow based on self-reported financial information. This step is:

But here’s the catch: it’s not verified. The lender doesn’t check your credit report or require documentation, so it’s more of an informal estimate rather than a guarantee.

A pre-approval, on the other hand, is a much more thorough process. It involves submitting official financial documents and undergoing a credit check so a lender can determine exactly how much they’re willing to lend you. With pre-approval, you get:

Since pre-approval means your finances have been reviewed, sellers and real estate agents see it as a stronger commitment than pre-qualification.

In a competitive market, sellers often receive multiple offers. A pre-approval letter shows that you’re financially prepared to buy, making your offer stand out. In contrast, a pre-qualification alone might not hold much weight because it’s not verified by a lender.