Pre-qualified or pre-approved?
The two terms sound alike but carry very different weight with a seller. A pre-qualification is a rough estimate based on what you tell a lender. A pre-approval is based on verified income, assets and credit, which is why sellers and agents take it seriously.
| Feature | Pre-qualification | Pre-approval |
|---|---|---|
| Based on | What you tell the lender | Verified documents and credit |
| Strength with sellers | Low | High |
| Time to get | Minutes | Usually within a day |
| What you get | A ballpark price | A letter for your agent and offers |
What you will need up front
Buying a home comes with costs before closing day. The two big ones are the down payment and closing costs, which generally range from 2% to 5% of the purchase price. Prepaid items, such as homeowners insurance and property tax escrow, round out the list. Our guide to the initial costs of buying a house walks through each one, and the down payment assistance page shows how to shrink them.
Documents to gather for pre-approval
- Pay stubs from the last 30 days
- W-2s or tax returns for two years
- Two months of bank statements
- Photo ID
- DD-214 or COE for VA loans
- Gift letter if family is helping
