Prequalified vs. Preapproved: What's the Difference?

While both prequalification and preapproval are helpful at the start of your homebuying journey, often one process makes more sense for you than the other. This depends on the specifics of your situation.

For example, prequalification might be the best option if:

• You’re at the start of your home search.
• You want help determining your home budget.
• You don’t have all of your financial documents together, or you don’t have the time to gather them yet.
• You want to get an idea of your loan options.
• You want to see if you’re in a financial position to buy a home.

On the other hand, preapproval may be the right choice if:

• You’re ready to make an offer.
• You want more detailed insight into your loan amount and future interest rate.
• You’re ready to provide financial documentation, including bank statements, tax returns, and more.
• You want to get as close as you can to loan approval so you can close quickly when you find a home.
• You’re making an offer to a seller that requires preapproval instead of prequalification.

Neither preapproval nor prequalification guarantees you’ll secure a loan. You’ll still have to go through the formal loan approval process to get your mortgage.

How to Get Prequalified or Preapproved for a Mortgage

Getting prequalified for a mortgage is simple, especially when working with Freedom Mortgage. The fastest, easiest way is to start the process online. You can also get prequalified by following these steps:

1. Contact Freedom Mortgage at 888-369-3719.
2. Give them permission to check your credit.
3. Answer some basic questions about your income.
4. Provide the estimated amount of your home down payment.
5. Describe other debts you have, including the costs of other properties you owe.

Getting preapproved is more involved. To get preapproved, you’ll need to:

1. Submit a preapproval application to your mortgage lender.
2. Gather financial documents, such as bank statements, tax returns, and W-2s or 1099s, to prove your income and the amount of assets you have.
3. Wait, as the process can take anywhere from a few days to a few weeks, depending on how complicated your finances are.

Home Loan Prequalification vs. Preapproval FAQs

Here are answers to some common questions about prequalification and preapproval and their roles in the homebuying process.

Is It Better to Be Prequalified or Preapproved?

Both can be helpful, but prequalification is a great place to start because it gives you an estimate of what you can afford. It’s a quick, accessible way to begin your homebuying journey and understand your budget. As you move forward, having more detailed financial information and preapproval ready can help strengthen your position with sellers.

Do Prequalification and Preapproval Affect Credit Scores?

Prequalifications usually just require a soft credit pull, which means your credit score won’t change. Preapprovals require a hard credit pull, which can result in a slight drop in your credit score, and the inquiries stay on your report for up to two years. Generally, multiple inquiries are often grouped together when you are shopping for a mortgage. This means if you get three inquiries from different mortgage lenders within a few weeks of each other, you only get one inquiry counted on your record.

Is Prequalification Enough to Make an Offer?

Prequalification can be enough to begin making offers, especially in less competitive markets. However, some sellers and agents may want additional financial verification to feel confident in your offer. Having clear financial documentation can strengthen your position as you move forward.

Final Thoughts: Mortgage Prequalification vs. Preapproval

It might be worth getting prequalified so you can understand your loan options and make informed choices about shopping for a home or improving your financial credentials. Meanwhile, mortgage preapproval is a good idea if you’re committed to buying a home in the near future. While it takes more time, it can give you a clearer picture of what you can afford.

If you want a quick answer about your mortgage loan eligibility, start the prequalification process today so you’ll be ready to start looking for a home tomorrow.*

*This is not a commitment to lend. Application required and subject to underwriting approval and collateral requirements. Full documentation required. Not all applicants will be approved. Loan secured by a lien against your property. Terms, conditions and restrictions apply. Fees and charges apply and may vary by state, product, and loan amount. Interest rates are subject to change without notice. If you do not lock in a rate when you apply, that rate may not be available at loan commitment, lock-in or closing. Additional payments of taxes & property insurance are required. Important information relating specifically to your loan will be contained in the loan documents, which alone will establish your rights and obligations under the loan plan.