A mortgage prequalification will get you a rough estimate of how much money a mortgage lender may let you borrow and help you figure out how much house you can afford. Getting prequalified is usually a fast, free process where you self-report your financial information and the lender will do a soft credit check (so it won't affect your score).
Getting prequalified for a home loan is not as official as getting preapproved, but it's still a good first step to ensure you're financially qualified to buy a home. It's also a good way to compare offers and rates between lenders. Here's more about what you need to do to get prequalified for a mortgage.
🏡 Not sure where to get prequalified? Clever Real Estate can help. We'll match you with top local real estate agents in your area who can connect you with lenders in their network to get prequalified. Clever vets agents from top brokerages nationwide—think Keller Williams, Berkshire Hathaway, and more. Get your free Clever agent matches today.
When should you start the mortgage prequalification process?
Start getting prequalified with several different lenders at least 6 to 12 months before you become serious about house hunting. This will give you time to address any issues that may help you qualify for better rates and terms, like improving your credit score, paying down debt, or saving for a bigger down payment.
For most buyers, the “right time” to start the prequalification process is when you've done the following:
- You've saved enough for a down payment.
- Your income has been stable for at least two years.
- You've paid down high-interest debt or have a plan to do so.
- You're emotionally and financially ready to commit to homeownership.
Don’t wait until you find your dream home to get prequalified. Whether you’re earning a $50,000 or $90,000 salary, starting early gives you a realistic budget for your home search.
What do you need to prequalify for a mortgage?
To prequalify for a mortgage, you’ll need to know your financial information so you can share it with your lender. While you don’t need to submit any paperwork, you should have the following information handy when submitting your application:
- Your income: This includes your gross monthly or annual income from your job, side gigs, or other sources.
- Existing debts: Know what you owe on credit card balances, car loans, student loans, etc.
- Estimated credit score: Use a free credit monitoring service or your credit card issuer’s app to check your credit score.
- Down payment amount: How much are you willing to put down toward the home purchase?
- Assets: This includes checking and savings account balances, investment accounts, and retirement accounts.
- Employment information: You’ll need to share your job title and the length of time in your current position.
The more accurate your information is, the more reliable your prequalification estimate will be. So, be as honest as possible when providing these details. If you have some of the documentation handy, it's a good idea to start gathering it now. When you move on to preapproval, you'll need W-2s, bank statements, pay stubs, and more to verify your income, debt, and assets.
How to prequalify for a mortgage in 5 steps
Once you've decided you're ready to get prequalified and you have your financial information available, here are the five steps to follow to get prequalified for a mortgage. The entire process typically takes 30 minutes to an hour per lender, and you can often complete it the same day you decide to start.
1. Choose which lenders you want to get prequalified with.
Pick two to three lenders, which can be your bank, credit union, or online lender. You can ask your real estate agent for recommendations or you can start with our top 10 recommended mortgage lenders.
2. Start contacting mortgage lenders.
Most lenders offer online prequalification tools, which means you can get an estimate within minutes of submitting your financial details. You may also talk to a loan officer over the phone, especially if you need clarification over specific things. Another option is going through a mortgage broker, which is someone who can help you get prequalified and shop multiple lenders from one spot.
3. Provide the most accurate information you can.
When submitting your information, be honest about your income, debts, assets, and employment. Being accurate now saves you from disappointment later and helps you set realistic expectations from the start. A mortgage prequalification is just a starting point and not enough for a lender to actually give you the funds, so padding your numbers won't do you any favors. Once you move on to preapproval and eventually closing, you'll need your numbers and documentation to be completely accurate to ensure your loan goes through.
4. Review your estimates on your prequalifications.
Mortgage lenders will give you loan estimates based on the information you share. Compare loan amounts, interest rates, and monthly payments across lenders. Remember, these are informal estimates, which may change during preapproval. But they are still a good starting point to decide how much you can afford and which lender you should go with.
5. Ask for a prequalification letter.
While it’s not as powerful as a preapproval letter, a prequalification letter can be used to create your action plan. Set your house hunting budget, preferably 10–15% below your maximum loan estimate. Identify areas where you can improve your financial position. Finally, choose your preferred lender for the preapproval process.
Mortgage prequalification vs. preapproval
Prequalification and preapproval are two mortgage terms often thrown around interchangeably, but they’re completely different. Understanding the difference between them can help you know when each makes the most sense.
Prequalification is a quick, informal estimate based on the financial information you provide. It usually takes a few minutes and doesn’t require a credit check or documentation for verification.
A preapproval is a more in-depth process that takes days to complete. The lender verifies everything, from your income to assets, employment, and credit history. They’ll pull your credit report and review your pay stubs, tax returns, and bank statements. You’ll get a preapproval letter that outlines the mortgage you qualify for, including the interest rate, monthly payments, and term. You can use this preapproval letter to strengthen your offer on a home, while a prequalification letter is a good starting point but doesn't hold as much weight.
Will a mortgage prequalification hurt my credit score?
No, prequalifying for a mortgage won’t hurt your credit score. This is because most lenders run a soft credit inquiry that will appear in your report but doesn’t impact your score. However, always ask upfront whether they'll be doing a hard or soft credit pull just to be safe.
Once you proceed to preapproval, lenders will perform a hard credit inquiry, which might lower your credit score by a few points. But don’t let this alarm you. Credit scoring models treat multiple inquiries within a short window (usually 14–45 days) as a single inquiry, so you can shop around for multiple preapprovals without hurting your credit too much.
Next step: Prepare for preapproval
Prequalification is a great first step in your home-buying process. If prequalifying revealed a lower loan estimate than expected, use this time to increase your down payment, improve your credit score, and reduce debt.
You may also want to consider creating a home-buying checklist before you start house hunting. This includes researching neighborhoods you’d like to live in, knowing your mortgage loan options, and comparing lenders. Once you’re ready, get preapproved for a mortgage, then go out and find your dream home.