Getting prequalified for a mortgage is a smart first step when buying a home that's usually fast and free to you. Mortgage prequalification gives you a high-level estimate of whether or not you may qualify for a mortgage and how much you can borrow, based on the financial information you provide.
A mortgage prequalification is a good place to start if you're testing the waters for what you can afford and exploring lender options. Getting preapproved for a mortgage will require more documentation and will be what you officially include with your offer letter, but you don't need to do that until you're actively putting offers on homes.
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What is mortgage prequalification?
Mortgage prequalification is a lender’s informal assessment of how much money you might be able to borrow to buy a home. Lenders will prequalify you based on the financial information you provide, like your income, debt, savings, and assets.
During prequalification, the lender often takes what you say at face value and gives you a rough estimate of the loan amount you may qualify for. This is why it's a good place to start but not a hard-and-fast guarantee: lenders won't fully trust the information you can provide before they can verify it with documentation.
Getting prequalified is free, takes a few minutes, and doesn’t require you to submit any paperwork or financial documents. Many lenders offer online prequalification tools, and most use a soft credit inquiry, which doesn’t affect your credit score.
Prequalification vs. preapproval: What’s the difference?
Prequalification and preapproval are two terms often used interchangeably. However, they’re two distinct steps in the mortgage approval process. At a high level, getting prequalified requires no documentation and is a soft credit check while getting preapproved is a more formal process that requires a hard credit check.
With a preapproval, you’ll have to provide W-2s, pay stubs, bank statements, tax returns, and records of your debts. The lender will also check your credit score. If approved, you’ll receive a preapproval letter stating the loan amount you can borrow.
In short, a prequalification makes sense when you’re in the early stages and just want to know a budget to work with. A preapproval is the next step once you’re ready to start hunting for your dream house.
When should you prequalify for a mortgage?
Ideally, you should prequalify for a mortgage six to 12 months before you plan to buy. This way, you’ll have enough time to fix any issues that could give you more favorable mortgage terms. For example, improving your credit score could mean lower interest, or reducing your debt could increase your affordability. Catching these issues early will give you time to fix them before you’re ready to buy.
Even if your finances are in good shape, prequalifying early can help you house hunt with more clarity. It gives you a high-level overview of how much you can afford, so you can focus your search on homes within your budget.
Does prequalifying for a mortgage affect your credit score?
No, getting prequalified for a mortgage doesn't affect your credit score. Lenders run a soft credit check during prequalification. This will show up in your credit report, but it won’t impact your credit score.Â
That’s why prequalifying is a safe, low-risk first step for those starting their homeownership journey. You get a rough estimate of the mortgage loan without any negative impact on your credit report.
If you decide to move forward and get preapproved, lenders will perform a hard credit check, which can temporarily lower your credit score by a few points. However, if you get preapproved by multiple lenders within the same period, it will count as a single hard inquiry.
How to prequalify for a mortgage
Prequalifying for a mortgage is a simple process that’s useful if you want to better understand your financial standing before getting serious about buying a home. Here’s how to prequalify for a mortgage:
Choose a lender to work with.
You don’t need to commit to a lender at this stage, but you need to choose one or multiple to run your prequalification. This could be your bank, credit union, an online lender, or a local mortgage broker.
Make sure you know your financial information.
Most lenders will ask you to self-report your financial information, which may include proof of income, monthly debt payments, how much you’ve saved for a down payment, and your current employment situation.
You’ll submit this information through an online form or speak with a loan officer. You don’t need to submit any documents or proof; the lender will use the details you provide to determine how much you can borrow.
Authorize a credit check.
Nearly all lenders will run a soft credit inquiry to review your credit score and general credit health. This won't affect your credit score, but it helps the lender give you a more accurate estimate. If you’re unsure whether they’re doing a soft or hard pull, ask upfront.
Receive an estimate.
Based on the information you provide, the lender will give you an estimate of the loan amount you may qualify for, potential monthly payment ranges, and possible interest rates. Keep in mind that this estimate is not formal.
Remember, mortgage prequalification doesn’t require paperwork and involves a soft credit check that won’t negatively impact your credit score. So, you can get prequalified by multiple lenders. Feel free to shop around, as you may get different loan estimates.
Use the results to decide what's next.
You can use the prequalification to plan your next move. Identify and fix any financial gaps before you take the next step. When you’re ready to move on to the preapproval process, start gathering your documents. If you don't have a real estate agent yet, now is a good time to get one. You can start by getting free matches with top-performing agents from our partners at Clever Real Estate.
How long does mortgage prequalification take?
Prequalification is one of the fastest parts of the mortgage process. In many cases, it takes less than a day, and sometimes just minutes if you’re applying online.
Because you’re not submitting documents for verification, lenders respond quickly. Some offer instant estimates once you complete their form. Others might follow up with a phone call to clarify your answers before giving you your mortgage potential.
Should you get prequalified for a mortgage by more than one lender?
Yes, prequalification is a great way to compare lenders without risk. Since it typically involves a soft credit check, shopping around won’t hurt your score. You can see how different lenders estimate your borrowing power, what interest rates they might offer, and what loan programs they suggest based on your situation. Just remember to stay consistent when sharing your financial information across lenders. That way, you’re comparing apples to apples.