Both terms come up early in the home buying process and both involve a lender reviewing your financial situation. But they are not the same thing, and confusing them can cost you your dream home. Here's exactly what each one means and which one you actually need.
Pre-qualification: a rough estimate
Pre-qualification is a quick, informal process where a lender gives you a ballpark figure of what you might be able to borrow. It's usually based on information you provide verbally or through a simple online form: your income, your existing debt, your assets, and your estimated credit score.
No documents are verified. No credit pull happens (or only a soft pull, which doesn't affect your score). The result is an estimate, not a commitment. It might say something like "you may qualify for up to $450,000" but that number could change significantly once your actual documents are reviewed.
Pre-qualification is useful for getting a general sense of where you stand before you start house hunting. It's not useful for making offers on homes.
Pre-approval: a real commitment
Pre-approval is a formal process. You complete a full mortgage application, submit documentation, and the lender verifies everything: your income, your employment, your tax returns, your bank statements, your credit history. A hard credit pull is run. An underwriter reviews your file.
The result is a pre-approval letter that states a specific loan amount you're approved for, subject to an acceptable property appraisal. This is a real commitment from your lender. Sellers and their agents take it seriously because it means the work has already been done.
A pre-approval letter from a direct lender carries more weight than one from a broker. Sellers know that a direct lender controls the entire process and that the approval is more solid. As a direct lender, Bedrock's pre-approval letters carry that weight.
Side-by-side comparison
| Pre-Qualification | Pre-Approval | |
|---|---|---|
| Documents required | None | Pay stubs, tax returns, bank statements, ID |
| Credit pull | None or soft pull | Hard pull |
| Income verified | No | Yes |
| Time to complete | Minutes | 24 to 48 hours |
| Result | Rough estimate | Commitment letter with specific amount |
| Accepted by sellers | Rarely | Yes |
| Valid for | A general reference | 60 to 90 days typically |
Why sellers care
When a seller accepts your offer, they're taking their home off the market. If your financing falls through, they've lost time and potentially other buyers. A pre-approval letter tells them that your financing has already been vetted by a lender, reducing their risk significantly.
In a competitive market, a pre-qualification letter can actually hurt you. A listing agent may choose an offer with a pre-approval letter over your offer with a pre-qualification, even if your offer price is the same or higher. The pre-approval signals that you're a serious, prepared buyer who can actually close.
What you'll need for pre-approval
Gathering these documents before you start the process will speed things up considerably:
- Two years of W-2s or 1099s
- Two years of federal tax returns
- Most recent 30 days of pay stubs
- Two most recent months of bank statements (all pages)
- Government-issued photo ID
- If self-employed: two years of business tax returns and a year-to-date profit and loss statement
- If applicable: divorce decree, bankruptcy discharge papers, or gift letters
How long does pre-approval last?
Most pre-approval letters are valid for 60 to 90 days. If you haven't gone under contract within that window, your lender will need to refresh the file. This typically involves pulling credit again and verifying that your financial situation hasn't changed. It's a quick process if nothing has changed.
If your pre-approval expires, that's fine — life happens. Just loop back with your lender before making another offer so the letter is current.
Get a real pre-approval from Bedrock. Takes about 10 minutes. You'll have a letter you can actually use.
Get pre-approved →