--- title: The Difference Between Prequalification and Preapproval description: Why is a mortgage Preapproval so much better than just getting Prequalified? Many people think they are the same but they’re not. In today’s market you w image: https://www.thereverseadvisor.com/hubfs/Imported_Blog_Media/House_and_Key.jpg --- [Skip to content](https://www.thereverseadvisor.com/blog/the-difference-between-prequalification-and-preapproval#main-content) [![](https://www.thereverseadvisor.com/hs-fs/hubfs/TRA_logo_-_only_left_side.png?width=134&height=103&name=TRA_logo_-_only_left_side.png)](https://www.thereverseadvisor.com/) - [Our Process](https://www.thereverseadvisor.com/unique-process) - [About](https://www.thereverseadvisor.com/about) - [Blog](https://www.thereverseadvisor.com/blog) Open main navigation Close main navigation - [Our Process](https://www.thereverseadvisor.com/unique-process) - [About](https://www.thereverseadvisor.com/about) - [Blog](https://www.thereverseadvisor.com/blog) - [Contact Us](https://www.thereverseadvisor.com/contacts-us) [Contact Us](https://www.thereverseadvisor.com/contacts-us) [All posts](https://www.thereverseadvisor.com/blog/all) # The Difference Between Prequalification and Preapproval By  [Kent Kopen](https://www.thereverseadvisor.com/blog/author/kent-kopen) ![Buying-a-home-with-a-reverse-mortgage](https://www.thereverseadvisor.com/hs-fs/hubfs/Imported_Blog_Media/House_and_Key.jpg?width=320&name=House_and_Key.jpg "Buying-a-home-with-a-reverse-mortgage")   Why is a mortgage **Preapproval** so much better than just getting **Prequalified**?  Many people think they are the same but they’re not.  In today’s market you want the right one to save you time, money and unnecessary legal headaches.   #### **Prequalification is a lender’s estimate of how much you could be eligible to borrow**  A prequalification doesn’t mean a loan can be done; especially since today’s lender guidelines are interpreted much stricter than in the past.  That is what is meant by “credit remains tight.”   The prequalification process usually goes like this: a buyer contacts a mortgage broker; the broker asks them how much they make, how much of a down payment they have, and if their credit is good.  Sometimes, they pull a credit report.  The broker sends back a letter stating the buyer is ‘*prequalified*’ for a specific loan amount and purchase price.    The prequalification is full of disclaimers, as it must be, because the lender has not reviewed any of the borrower’s documents. #### **Preapproval means the lender is ready to make you a mortgage loan** This is based on information and documentation you provided at the time you requested the preapproval.\*    In contrast, a preapproval is basically an underwritten loan in terms of credit, income, and assets.  What remains to be reviewed are the purchase agreement and appraisal.  For a preapproval, documentation was provided by the borrower and reviewed by the lender; including a two-year work history, paystubs, tax returns, and bank statements.   ## **A prequalification doesn’t reveal potential problems** - Income received, but not reported on federal tax returns - Adequate savings for down payment, but not enough for required reserves - Gaps in work history in past two years - Inconsistent or declining income over past two years - No way to prove where down payment money came from With a prequalification, the hopeful home buyer doesn’t know that they’re not going to be able to get a loan – resulting in disappointment, lost time, and deposit money at risk or wasted on inspections and an appraisal.   With a preapproval, these issues are identified up front.  Sometimes, with the benefit of time, there are workarounds.  If not, the buyer learns what they can qualify for and shop accordingly.    Another reason to get a preapproval is because many markets have low inventory; there aren’t enough homes for sale.  This leads to multiple offers and cash buyers being favored.  In such a market, the prospective buyer wants every possible advantage and for their offer to be taken seriously.   Considering the time, energy, and emotional strain of buying a home; a **preapproval is worth the extra effort**.  Not only can it shorten the time to close, but the buyer has more confidence putting down an earnest money deposit and paying for inspections.   Another way to leverage preapprovals is to have the lender prepare multiple versions with different loan amounts.  For example, when negotiating on a $500,000 house, with a 20% down payment (borrowing $400,000), you wouldn’t provide a preapproval letter saying you’re approved for a $1 million dollar loan.  You want one that says you’ve been preapproved for $400,000.  Otherwise the seller will think you can afford the higher price they’d like to sell the home for and they’ll be less willing to accept your lower offer.   *\*Prequalifications and preapprovals are subject to acceptable review of the appraisal and purchase contract* Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://www.thereverseadvisor.com/blog/the-difference-between-prequalification-and-preapproval) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://www.thereverseadvisor.com/blog/the-difference-between-prequalification-and-preapproval) [twitter icon](https://twitter.com/intent/tweet?url=https://www.thereverseadvisor.com/blog/the-difference-between-prequalification-and-preapproval) [Share this page on Facebook](mailto:?body=https://www.thereverseadvisor.com/blog/the-difference-between-prequalification-and-preapproval) ## Related posts [![](https://www.thereverseadvisor.com/hubfs/Imported_Blog_Media/Scale_-_licensed_photo-1.jpeg)](https://www.thereverseadvisor.com/blog/the-pros-and-cons-of-a-reverse-mortgage) [Risks](https://www.thereverseadvisor.com/blog/tag/risks) ### [The Pros and Cons of a Reverse Mortgage](https://www.thereverseadvisor.com/blog/the-pros-and-cons-of-a-reverse-mortgage) [![](https://www.thereverseadvisor.com/hubfs/Imported_Blog_Media/Jumbo%20Reverse%20Examples.png)](https://www.thereverseadvisor.com/blog/jumbo-reverse-mortgage-examples) [jumbo reverse mortgage](https://www.thereverseadvisor.com/blog/tag/jumbo-reverse-mortgage) ### [Jumbo Reverse Mortgage Examples](https://www.thereverseadvisor.com/blog/jumbo-reverse-mortgage-examples) [![](https://www.thereverseadvisor.com/hubfs/Imported_Blog_Media/Blog%20picture%20-%20Castle.jpg)](https://www.thereverseadvisor.com/blog/jumbo-reverse-mortgage-pros-and-cons) [jumbo reverse mortgage](https://www.thereverseadvisor.com/blog/tag/jumbo-reverse-mortgage) ### [Jumbo Reverse Mortgage - Pros & Cons](https://www.thereverseadvisor.com/blog/jumbo-reverse-mortgage-pros-and-cons) [![The_Reverse_Advisor_Logo](https://www.thereverseadvisor.com/hs-fs/hubfs/TRA_logo_-_only_left_side.png?width=195&height=150&name=TRA_logo_-_only_left_side.png "The_Reverse_Advisor_Logo")](https://www.thereverseadvisor.com/) [facebook-f icon](https://www.facebook.com/thereverseadvisor/) [youtube icon](https://www.youtube.com/@TheReverseAdvisorMortgage/videos) [twitter icon](https://x.com/i/flow/login?redirect_after_login=%2FReverse_Advisor) ## Contact   800-208-1252    Nationwide Loans, Inc, 701 Palomar Airport Road, Suite 300, Carlsbad CA 92011 ### Subscribe   ---   Copyright © 2026, The Reverse Advisor [Privacy Policy](https://www.thereverseadvisor.com/privacy-policy)  |  [Terms of Use ](https://www.thereverseadvisor.com/terms-of-use) |  [Licensing](https://www.thereverseadvisor.com/licensing) Mortgage brokerage services offered through Nationwide Loans, Inc. For informational purposes only. This is not a commitment to lend or extend credit. All loans are subject to credit approval. The Reverse Advisor powered by Nationwide Loans, Inc, 701 Palomar Airport Road, Ste 300, Carlsbad CA 92011, (800) 540-3909, NMLS #1799965. [State Licenses |](https://www.mynli.com/licensing/) [NMLS Consumer Access](https://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/1799965) | [Privacy Policy](https://www.nationwideloansinc.com/privacy-policy/) | Equal Housing Opportunity. Kent Kopen: NMLS (#249631, issued 2012), CA Broker License (#01170224, issued 2010), TX SML, AZ DFI (LO-1030531), FL (#249631), Certified Liability Advisor. The Reverse Advisor is an educational initiative to help homeowners 55 and over better understand reverse mortgages. ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Kent Kopen", "url" : "https://www.thereverseadvisor.com/blog/author/kent-kopen" }, "dateModified" : "2024-03-18T19:07:53.107Z", "datePublished" : "2015-03-02T05:00:00.000Z", "headline" : "The Difference Between Prequalification and Preapproval", "image" : [ "https://www.thereverseadvisor.com/hubfs/Imported_Blog_Media/House_and_Key.jpg" ], "mainEntityOfPage" : { "@id" : "https://www.thereverseadvisor.com/blog/the-difference-between-prequalification-and-preapproval", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.thereverseadvisor.com/hubfs/TRA_logo_-_only_left_side.png" }, "name" : "The Reverse Advisor" } } ``` ```json { "@context" : "http://schema.org", "@type" : "Article", "author" : { "@type" : "Person", "name" : [ "Kent Kopen" ], "url" : "https://www.thereverseadvisor.com/blog/author/kent-kopen" }, "datePublished" : "2015-03-02T05:00:00+0000", "description" : "Why is a mortgage Preapproval so much better than just getting Prequalified? 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