Mortgage Prequalification

What It Is and How It Works

Prequalification gives you an estimate of how large a loan you may get to buy a home based on information you provide. A prequalification isn't a guarantee you qualify to borrow a certain amount of money or your mortgage application will be approved, but it does help you shop for affordable homes.

What Is Mortgage Prequalification?

Simply put, mortgage prequalification is an estimate of how much you'll be able to borrow, based on your self-reported income, assets, monthly debt payments, and other financial information. Freedom Mortgage uses this information to create a prequalification letter for your review.

Prequalification letters are also used to provide sellers with evidence that you could be approved for the loan amount you need to buy their home. The process of getting prequalified is straightforward and informal, and it helps you figure out what homes are realistically in your budget.

Prequalification vs. Preapproval

While some lenders only offer prequalification, others offer only preapproval or both. Currently, Freedom Mortgage only offers prequalifications to its customers.

While prequalification and preapproval share many similarities, they typically have some key differences:

How Do You Prequalify for a Mortgage?

To get prequalified with Freedom Mortgage, we'll ask for some basic information about you and anyone who might be a co-borrower on the home loan with you. Be prepared to provide the following:

• Name and date of birth
• Social Security number
• Contact information
• Employment status
• Employer information
• Gross monthly income

When you're prequalifying with Freedom Mortgage, we may ask some additional questions to help narrow down the types of mortgages you may qualify for. You can then decide whether you'd like to apply.

While prequalification isn't set in stone, it gives you some preliminary information to help guide your home search.

Mortgage Prequalification Requirements

Anyone can seek mortgage prequalification. Your credit, income, and finances affect whether you can be prequalified for a mortgage as well as the estimate of how much money you may be able to borrow.

To be approved for a conventional loan, you'll likely need a credit score of at least 620 and a debt-to-income ratio (DTI) of 45% or less, though these requirements will vary based on lender. If this doesn't match your financial situation, a Federal Housing Administration (FHA) loan or Department of Veterans Affairs (VA) loan might be better suited to your situation.

Mortgage Prequalification FAQs

We can help you understand the ins and outs of prequalification with answers to some frequently asked questions:

How Long Do Mortgage Prequalifications Last?

At Freedom Mortgage, our prequalifications last for 90 days. We'll be happy to prequalify you again if your home search takes longer than that.

Keep in mind that home price estimates may change if interest rates change. When interest rates go up, this generally lowers the price of homes you can afford. When rates go down, this can raise the price.

Does Getting Prequalified Affect Your Credit Score?

At Freedom Mortgage, we run a credit check as part of the mortgage prequalification process. This credit check might have an impact on your credit score. The Fair Isaac Corporation, better known as FICO, states that for most consumers, a hard credit check will lower their credit score by less than five points. Learn more about these credit checks.

Does Getting Prequalified Mean You've Been Approved for a Mortgage?

No. Getting prequalified doesn't guarantee you'll be approved for a mortgage. It helps you understand the prices of homes you can afford and the amount of money we may be willing to let you borrow. You will need to apply for a mortgage to get approved.

Do You Charge a Fee for Mortgage Prequalifications?

Most lenders don't charge a fee for prequalification. At Freedom Mortgage, we are happy to prequalify you for a mortgage at no cost.

Final Thoughts: When Should You Get Prequalified for a Mortgage?

It's a good idea to get prequalified before starting your home search. This way, you'll have a sense of home prices within your budget and the type of loan you could get approved for. With more information in hand, you can be more confident about finding a home you can afford. Start the prequalification process online. We're here to help however you need on the road to becoming a new homeowner.