Loan Pre-Approval vs. Loan Pre-Qualification

Pre-Approval Letter

Pre-approval is an early step in your home buying journey.  When you obtain a pre-approval for a home loan, you are getting an “estimate” of what you might be able to borrow.  The benefit is to provide basic information to a lender and quickly get a pre-approval amount.  Does it affect your credit?  Getting pre-approved does not affect your credit score.  Lenders usually base pre-approvals on the information you provide and do not pull your credit.


A pre-qualification is a preliminary evaluation of a potential borrower by a lender to determine how much you can offer on a home.  Getting pre-qualified for a mortgage gives you bargaining power since you have mortgage financing already lined up and can therefore make an offer to the seller of a home in which they are interested.

What do lenders need?  (1) Debt-to income ratio; (2) Loan-to-value ratio; (3) Credit history;     (4) FICO score; (5) Income; and (6) Employment history.  

In Arizona, you want to be pre-qualified with a lender as you are required to submit an Arizona Loan Pre-Qualification Form, signed by you and your lender, with your offer.  To make your offer even stronger in the seller’s eyes, use a local lender and give the following documents to your lender in advance: (1) Paystubs; (2) W-2s; (3) Personal and/or Corporate Tax Returns; (4) Down Payment/Reserves Documentation; (5) Gift Money Documentation; and (6) Credit/Liability Documentation.

Let us know if you need local lenders to contact.  Enjoy your day.

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