How to Get a Mortgage Pre-Qualification

For many homebuying hopefuls, getting pre-qualified is the first step on the road to homeownership. It's a quick way to understand how much you can borrow before you start house-hunting.

In this guide, we'll take a closer look at mortgage pre-qualification so you know what to expect.

What is mortgage pre-qualification?

Pre-qualification is an informal estimate of how much you might be able to borrow based on information you self-report to a lender. Unlike pre-approval, pre-qualification typically does not involve a hard credit check, so it won't affect your credit score.

During pre-qualification, a lender will typically ask about:

• Your income
• Your monthly debts
• Your assets
• Your estimated credit score

Based on this information, the lender will give you a rough estimate of how much you might be able to borrow.

Pre-qualification vs. pre-approval

Pre-qualification is a preliminary step. Pre-approval is more thorough. A pre-approval involves the lender verifying your financial information and running a hard credit check. As a result, a pre-approval carries more weight with sellers and gives you a more accurate picture of your buying power.

Think of pre-qualification as a starting point. Use a mortgage calculator alongside the process to estimate what monthly payments at different loan amounts would look like.

How to get pre-qualified

Getting pre-qualified is simple. You can often do it online in minutes by providing basic financial information. No documentation is typically required at this stage.

Steps to get pre-qualified:

1. Choose a lender or use an online pre-qualification tool
2. Provide income, debt, and asset information
3. Receive an estimate of how much you may be able to borrow

To get the most accurate estimate, be honest and thorough about your finances. If your debt-to-income ratio is high, you may need to pay down some debt before you can qualify for the mortgage amount you want. Consider looking into a soft inquiry option to check rates first.

Improving your chances of pre-qualification

If you want to qualify for a larger loan or better terms, focus on improving your credit profile. Pay down debt, make all payments on time, and avoid opening new credit accounts. Platforms like Kikoff can help you add positive payment history to your credit report. 

Build credit responsibly with Kikoff's plans.