Rachel Johnsen Real Estate Concierge Serving Golden, Arvada and Wheat Ridge Colorado Real Estate Search and Market Updates To Buy a Home or Sell Your Home
Buying A Home, First Time Home Buyers, Real Estate 101

The Difference Between a Pre-Qualification vs. Pre- Approval

There is plenty of real estate terms used in transactions. Needless-to-say it can be confusing for both buyers and sellers trying to navigate the process. 

The home loan process might feel overwhelming and difficult to understand. Both buyers and sellers find terms like “Pre-Qualification” and “Pre-Approval” used interchangeably, it’s no wonder they find themselves wondering how to proceed.


The first step in obtaining a home loan is to meet with a lender to discuss their financial situation. The lender will discuss income, job stability, debt, and credit.

Once the lender has performed a basic review of the qualifications and run a credit report, they will issue a Pre-Qualification Letter to the potential buyer. This letter will identify the maximum sales price, down payment requirement and basic terms of the loan, such as interest rate.

The Pre-Qualification letter is used to provide evidence that the buyer has been reviewed by a  lender who is vouching for their ability to obtain a loan.


A Pre-Approval is quite different. In this case, the lender collects all the necessary information and proof of eligibility and has it reviewed by the lender underwriter for approval.

A Pre-Approval letter is almost like shopping with cash, the only remaining piece of the puzzle is the property they are buying.

We’re here to help you navigate and demystify the home buying process. From finding the right lender, finding the right home and negotiating the best deal we strive to be your trusted real estate advisor and realtor in the Greater Denver Area.

Contact us with all of your real estate related questions, we’d love to help.