Pre-approval vs pre-qualification
Pre-qualification is a soft estimate. Pre-approval is a verified commitment letter from a lender.
A pre-qualification is a 5-minute conversation: you tell the lender your income, debts, and assets, and they give you a rough price range. It's non-binding and uses no documentation. A pre-approval is a real underwriting pre-check: the lender pulls your credit, verifies income with W-2s/pay stubs, and issues a letter committing to lend up to a specific amount at current rates. Most sellers won't take an offer seriously without a pre-approval letter, especially in competitive markets. Letters usually expire in 60–90 days.
Related
- DTI (Debt-to-Income Ratio) — Your total monthly debt payments divided by gross monthly income.
- LTV (Loan-to-Value) — Loan amount divided by home value, expressed as a percentage.