If you’re thinking about buying a home, or know someone who is - you’ve probably heard the terms pre-qualification and pre-approval tossed around. While they might sound similar, they’re not the same thing. And knowing the difference can save you time, stress, and even help you win in a competitive market.
Pre-Qualification:
Think of this as a casual conversation with your lender. Based on the information you provide about your income, debts, and assets, the lender gives you an estimate of how much you might be able to borrow. It’s a helpful first step to get a rough idea of your price range, but it’s not verified or guaranteed.
Getting Pre-Qualified is good for the early stages of house hunting, and getting a general idea of your budget
There are limitations with getting a pre-qualification: A pre-qualification is not based on verified financial information and won’t carry much weight with sellers.
Pre-Approval
A Pre-Approval is the real deal. A lender will formally review your income, credit history, employment, and other financial documents to determine exactly how much they’re willing to lend you. You’ll get a pre-approval letter stating the amount, which you can confidently use when making an offer.
A Pre-Approval is good for knowing your firm budget, showing sellers you’re serious, and standing out in competitive offers
A pre-approval Involves a deeper credit and financial check and are typically valid for 60–90 days
Why This Matters
In today’s market, especially here in Surrey and the Lower Mainland, serious buyers are coming armed with pre-approvals. Sellers and listing agents want to see that you’re ready to go. If you fall in love with a home and don’t have your pre-approval ready, you risk missing out.
If you’re unsure where to start or need a recommendation for a great mortgage broker, I’d be happy to connect you with someone I trust.
Questions about the process or the market? I’m always just a call or text away.
Jon Pereira
