People use these words interchangeably and they shouldn't. Here are some traits and how I differentiate qualification and approval.

Pre-qualified: not solid.

  • Stated income

  • Stated assets

  • Soft credit check, maybe one bureau

Pre-approved: more solid

  • verified income (pay stubs)

  • verified assets (bank statements)

  • hard credit check

  • automated underwriting passed

One step further would be pre-underwritten

  • verified income by loan officer AND underwriter

  • verified assets by loan officer AND underwriter

  • hard credit report reviewed by underwriter

  • automated underwriting passed

  • verification employment form completed for any sign of variable income that would need to be averaged out

  • there's probably a little more, but can't think of them right now

If a lender offers any sort of guarantee, do what you can to get it. Submitting a guarantee with an offer can help you stand out.

Doing as much as you can up front will ensure a smooth and surprise-free mortgage process while contracts, deadlines, and earnest money deposits are on the line.

So many buyers fly by the seat of their pants as they buy a house:

  • bare minimum for a pre-approval letter

  • ask loan officer for the absolute max you can get approved for

  • shop for homes at the absolute limit

  • write an aggressive offer to get it accepted (two week close, finance deadline in 1 week)

This happens so much, and it creates such a stressful homebuying experience.

The underwriter might verify income lower than the loan officer. That destroys your absolute max approval in one go.

Maybe the loan officer didn't account for HOA fees. There goes your max approval.

Give the loan officer as much as you can upfront. See if the officer will run it through underwriting as well. See if the lender will offer any written guarantee you can include with your offers.