Pre-Qualification vs. Pre-Approval: How Are They Different?

What’s the difference between pre-qualification and pre-approval?

If you're thinking about buying a home, the first thing you should do is get pre-qualified. When you pre-qualify for a home mortgage, you can get a better idea of what you can afford and the price range of homes you should be looking at. It would be a waste of time to start looking for homes outside of your price range, and most realtors would want you to get a pre-qualification before starting to look at homes.

A pre-approval differs from this as it is more in depth. After getting pre-qualified and looking around for homes, once you've found the one you want to put an offer on, a lender can pre-approve you for a specific amount.

A pre-qualification is a quick process, but keep in mind when you are ready to get pre-approved, it will take a bit longer as there are proof of funds / documents you need to provide such as pay stubs, bank statements and tax information. For pre-qualification, you only need to answer a few questions such as general income info, desired mortgage amount and down payment estimate.

If you are unsure what your credit score is, a lender may do a soft credit pull to start which does not impact your score. This will give allow for a more accurate mortgage estimate. When you are ready for the pre-approval, a full credit check will be done to ensure the most accurate amount you will be approved for.

While pre-qualification and pre-approval are often used interchangeably, they serve very different purposes in the homebuying process. Understanding these differences can help you avoid delays, strengthen your offer, and know exactly when to take the next step.

See below for some key differences -

When Should You Get Pre-Qualified vs Pre-Approved?

• Pre-qualification is ideal if you're early in the process, casually browsing homes, or trying to understand a comfortable monthly payment.

• Pre-approval is best when you're actively working with a real estate agent and preparing to make an offer, especially in competitive markets.

Why Pre-Approval Matters to Sellers

From a seller's perspective, a pre-approved buyer is a safer buyer. Pre-approval shows that a lender has already reviewed your income, assets, and credit, reducing the risk of financing issues later in the process.

In competitive markets, sellers often receive multiple offers. A pre-approval letter helps your offer stand out by signaling that you're serious, prepared, and capable of closing on time. It also gives sellers confidence that the transaction is less likely to fall through due to financing delays or surprises.

In competitive Maine and New Hampshire markets, a strong pre-approval can make a meaningful difference when sellers are deciding which offer to accept.

Taking the First Step Toward Homeownership

Getting approved early in your home search is a great way to know what you can afford, so you can narrow in on your dream house and stand out to sellers as a pre-approved buyer. If you are a first-time homebuyer, working with a local lender to understand the process and your options is key in a successful homebuying experience. Reach out today to Acadia Lending Group to get more information and see what you may qualify for!

For a clear overview of the homebuying process, start with our First-Time Homebuyer Guide for Maine & New Hampshire.