How to Get Prequalified for a Mortgage
Updated: October 29, 2023
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Mortgage prequalification may be a beneficial step in your homebuying journey. Getting prequalified can help you determine how much mortgage you can afford and if you are financially ready to purchase a home.
To prequalify for a mortgage, you need to provide the lender with some basic information about your income, credit and existing debts. You must also state how much money you intend to put down on a home. In return, the lender will provide you with an estimated amount of how much you can borrow.
Keep in mind that the prequalification is nonbinding, meaning it doesn’t guarantee you’ll be approved for a mortgage. It’s wise to learn more about mortgage prequalifications and what you need to prequalify for a mortgage before pursuing homeownership.
What Is Mortgage Prequalification?
Before applying for a mortgage, it’s important to know how much you can borrow and whether you meet the minimum requirements for a loan. A mortgage prequalification can help you obtain that information.
With a prequalification, you have an idea of the loan size you can take on based on your financial profile. The estimated loan amount can also help you establish your homebuying budget and find a house in the right price range.
When you prequalify for a mortgage, you’ll be evaluated based on the financial information you submit. Lenders often take a look at the following factors:
- Credit score
- Income information
- Bank account information
- Down payment amount
- Desired mortgage amount
The process of prequalifying for a mortgage is fairly easy and quick, with the lender checking your self-reported information and conducting a soft credit check. You can usually prequalify online or over the phone and get an estimate within minutes.
Take note that mortgage prequalification is different from mortgage pre-approval. The latter involves pulling your credit report and verifying your financial information. The process can take up to 10 business days before you receive a pre-approval letter.
Steps to Get Prequalified for a Mortgage
Prequalifying for a mortgage is relatively easy as long as you provide accurate and up-to-date information about your finances. Below, MoneyGeek outlines the general steps on how to prequalify for a mortgage.
Should You Get Prequalified?
It’s easy to confuse mortgage prequalification with mortgage pre-approval, but there are significant differences between the two. A prequalification can be issued without much scrutiny of your financial information, whereas a pre-approval needs extensive verification.
Prequalifying for a mortgage is typically simple and quick. You only need to submit basic financial details, which your lender will review to give you a ballpark figure of how much they are willing to loan you. You can do this online or over the phone.
On the other hand, getting pre-approved requires submitting various documents such as pay stubs, W-2 statements, tax returns and more. Your lender will verify your information and pull up your credit report. Because there are more requirements, the process can take up to 10 days.
Whether you should prequalify for a mortgage ultimately depends on your needs and finances. You may skip this step if you’re already confident about your finances and borrower profile.
Comparison of mortgage pre-approval and prequalification
Frequently Asked Questions About Mortgage Prequalification
Prequalifying for a mortgage may be a helpful step in your homebuying process. MoneyGeek answers some frequently asked questions to help you learn more about mortgage prequalification.
You should get prequalified for a mortgage if you want an estimate of how much you can borrow from a lender. However, you may skip this step and get pre-approved instead if you’re confident about your qualifications and finances.
If you don’t prequalify for a mortgage, it means you don’t meet the lender's minimum requirements. This may not bode well for you as sellers prefer homebuyers who are more likely to get backing from a mortgage lender.
You may prequalify for a mortgage without affecting your credit score. This is because a lender will only perform soft credit inquiries to give you an estimate of how much it’s willing to loan you.
No, you won’t have to submit your tax information to get prequalified for a mortgage. You only need to provide basic information about your income, credit, debts and assets.
A prequalification only indicates how much you can borrow and doesn’t require official documentation, so it doesn’t have an expiration date, unlike a mortgage pre-approval.
Yes, you can. Just because you’re prequalified for a mortgage doesn’t mean your mortgage application will be approved.
The fastest way to prequalify for a mortgage may be online. This may only take a few minutes before you get prequalified.
During mortgage prequalification, your lender will ask you about your income, debts, credit and assets. You may also be asked about your down payment and desired mortgage amount.
Mortgage prequalifications are only as accurate as the information you provide your lender. Keep in mind that a mortgage prequalification is just based on assumptions made by your lender using the information you submitted.
The house-hunting process begins with finding out how much home you can afford. To do this, you may need to get prequalified or pre-approved for a mortgage.