When considering buying a home, you may choose to get pre-qualified for a mortgage to estimate how much you qualify to borrow before beginning the mortgage application or pre-approval process.
Talk to a lender
The first step to get pre-qualified for a mortgage is to speak with a lender who offers great rates and customer service.
After you've found a lender, they may ask for some basic information about your income, debts and assets. The financial information is typically self-reported. Some lenders may run a soft credit check. Be honest about the information you provide, so you get a more accurate home-loan estimate from the lender.
Receive a pre-qualification letter
If you meet the lender's requirements, they will issue a pre-qualification letter to let you know how much of a loan they're willing to grant. Keep in mind, pre-qualification is not a guarantee of receiving a mortgage loan. but it is a great way to see which types of loans are available to you and how much you may qualify for.
Frequently asked questions
What is mortgage pre-qualification?
Mortgage pre-qualification is a review of your self-reported income, debts and assets by a lender to determine how much they may be willing to lend you based on their requirements and the loan programs available to you. To get pre-qualified for a mortgage, you complete a brief mortgage application that, among other items, will ask about your employment history and credit score. You'll also need to supply documents proving your identity and financial information. However, a mortgage pre-qualification is not a guarantee that you will be approved for a mortgage loan. You'll need to complete a few more steps in the mortgage process before you receive a conditional loan approval.
Why should I get pre-qualified?
A mortgage pre-qualification letter shows your agent and sellers that you're working with a lender, and provides you with an estimation as to how much you might be able to afford when buying a home. Unlike with pre-approval, where you may spend hours tracking down financial documents that your lender must then verify, mortgage pre-qualification discusses only the information that you've already shared with your lender. This means that you can continue your search for a home without having to wait until you're ready to take the next step.
How long does it take to get pre-qualified for a home?
Lenders can generally turn around pre-qualification within an hour of submitting the required information.
How long does the pre-qualification last?
A mortgage pre-qualification letter normally doesn't have an expiration date. Unlike pre-approvals, which can last up to 90 days, a pre-qualification is good until your financial circumstances change. Essentially, a pre-qualification is an optional first step you can take before obtaining a mortgage pre-approval.
Does mortgage pre-qualification affect your credit score?
Getting pre-qualified for a home loan typically doesn't hurt your credit. The lender you contact won't check your credit score; they will just look at the information you provide. So Some lenders may do a soft pull of your credit, but that won't affect your credit score. When you connect with a lender to get pre-qualified, ask them beforehand if they plan on running a credit check.
What if I don’t pre-qualify for a mortgage?
Reach out to your lender and ask them why you didn't get pre-qualified. Most lenders will work with you and provide tips on how to improve your chances of getting pre-qualified for a home loan. Here are a few things that you can work on if you don't pre-qualify:
1) Create a plan to reduce debt
2) Save for a larger down payment
3) Work to improve your credit score
4) Fix any errors on your credit report
5) Increase your income