Pre-Qualification vs. Pre-Approval for SLC Homebuyers

During the very earliest stages of your entry into the mortgage and homebuying world, two terms you may hear often are pre-approval and pre-qualification. And while these are similar processes that serve some of the same roles, they also differ in important ways that you should be aware of before you hit the market.

At Altius Mortgage and our partners at Mortgage Ogden, our Salt Lake City loan officers are proud to work with clients on a variety of these kinds of processes, helping them understand their purchasing power so they can enter the market with better information. Here’s a primer on what both these services are, plus which is likely ideal for you.


Of these two processes, pre-qualification is the less binding and more flexible version. Pre-qualification involves you providing some very basic information regarding your income, assets, debts and previous credit history to your loan officer. The officer then uses this data to offer you a ballpark figure of how much they believe you can afford in terms of monthly mortgage payments.

The key difference is that pre-qualification involves no actual review of the financial documents itself; it merely invites an educated guess about what you could afford. It also allows the potential buyer to have a much broader sense of their purchasing power, as different loan officers can offer differing opinions based on a number of factors. It may involve estimates of things like credit scores, but no hard inquiries will be pulled on your credit or any part of your financial profile.


Pre-approval, on the other hand, is a more official form of pre-qualification. It’s actually closer to an actual mortgage application, involving you providing much more detailed information to your loan officer and allowing them to run a formal check of your financial history. This includes pulling up any prior credit accounts you may have, such as credit cards or auto loans, which is important in the pre-approval process because it gives an accurate look at how much debt you’re carrying.

The potential buyer will also need to provide their income documentation, which will then be run through a series of complicated algorithms that can determine exactly how much you can afford. The main benefit to pre-approval is that it gives the client what is known as “soft credit pull” (which doesn’t affect your score), plus an honest look at all the factors involved in the mortgage process so you can truly feel informed about your purchasing power.

Which is Best for You?

The answer here really depends on where you’re at in the homebuying process. Pre-qualification is ideal for clients who are just looking and still exploring their options, while pre-approval can be a good idea for those that have found a house they like and need some official documentation on how much they can afford — though there are also many situations where pre-approval will be carried out before you even begin touring the market, and will allow you to make offers on homes armed with a letter of purchase approval.

For more on pre-qualification versus pre-approval for borrowers, or to learn about any of our mortgage rates or other home loan services in SLC, speak to the staff at Altius Mortgage today.