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 afford before you start seriously shopping. 

But the pre-qualification process can feel confusing, especially if you are a first-time buyer. We’ll break down:

• What mortgage pre-qualification is
• What lenders look at during the process
• How to get pre-qualified, step-by-step
• How to improve your chances of getting a mortgage

Explore how to get mortgage pre-qualification answers and jump-start your search for a home to call your own. 

How to get a mortgage pre-qualification

Pre-qualification is usually a fast, informal process that allows you to learn whether you may be able to afford a home. Here’s how it typically works:

• Make sure you understand your income, debt, and credit details
• Choose a lender
• Submit your basic financial information, typically online
• Receive an estimate of how much you might be able to borrow

If you complete the process online, it will probably take only a few minutes. 

What is a mortgage pre-qualification?

A mortgage pre-qualification is an initial estimate from a lender regarding how much you can borrow to buy a home. The pre-qualification is based on self-reported information. It’s important to remember that it is not:

• A loan commitment
• A guarantee of approval
• Verified via a hard credit check 

Treat pre-qualification as a starting point for the homebuying process and use it to look for homes within a realistic price range. 

Pre-qualification vs. pre-approval

A pre-qualification is not the same as a pre-approval. These terms sound similar, but they involve very different processes. 

A mortgage pre-qualification is based on information that you provide. Typically, the lender doesn’t take the time to verify this information. The process usually involves a soft credit check, or none at all. 

If all you have is a pre-qualification, any offers you make on a home are unlikely to be successful. Instead, many sellers require a pre-approval letter. 

A mortgage pre-approval requires a more thorough process. To obtain a pre-approval, you must:

• Submit financial documents, such as pay stubs and W-2s
• Authorize a hard credit inquiry
• Provide additional forms as requested by the lender 

Pre-approval becomes important when you are ready to start viewing homes and putting in offers. 

What you need for mortgage pre-qualification

Knowing how to get mortgage pre-qualifications means learning what information is important to lenders. Luckily, since you’ll self-report this information, you don’t have to gather and submit any official documents. Here’s what you should know.

Basic income information

The pre-qualification form may allow you to report your income on an annual, monthly, bi-weekly, or weekly basis. Use whichever option you are most familiar with. 

Be as accurate as possible. If your income isn’t always steady, you may have to look up some numbers or make a few quick calculations.

Estimated debts and monthly payments

Next, you will be asked to estimate all of your debts, including:

• Auto loans
• Credit card balances
• Student loans

Provide a rough estimate of how much you pay toward these debts each month. The pre-qualification system will use this information to calculate your debt-to-income (DTI) ratio. This is one of the most important figures used to pre-qualify you for a mortgage. 

Credit score estimate (soft pull vs. self-reported)

Depending on the lender, you may self-report an estimated credit score or authorize a soft pull. A soft pull won’t negatively impact your credit, and it is a bit more reliable than consumer-reported estimates. If your pre-qualification is issued based on a soft credit pull, it may be viewed as more legitimate than a self-reported one. 

How long mortgage pre-qualification takes

Mortgage pre-qualification is one of the quickest steps during the homebuying process. Here’s what to expect.

Same-day approvals

Most pre-qualification tools issue same-day approvals. You should receive a response within a few minutes to a few hours, depending on the platform. 

What can delay the process?

Most lenders allow you to apply online, which means you’ll receive a response in minutes. If you apply in person or over the phone, the pre-qualification process can take a bit longer. Factors that could delay the response time include applying at the end of a business day or failing to provide all required information. 

How to improve your chances of qualifying 

Now that you know how to get mortgage pre-qualifications, it's time to focus on improving your chances of qualifying. Start with these tips.

Lower your debt-to-income ratio

Your DTI ratio is the percentage of your gross monthly income that you use to pay debts, such as credit cards and auto loans. Most types of mortgages have hard DTI caps. If you are near or above the limit, you may not get pre-qualified, even if your credit score is adequate. 

Simply continuing to make regular payments won’t lower your DTI. Instead, you’ll need to pay one or more debts off in full or refinance to a lower monthly payment. This can take months or years of consistent financial discipline. 

It can be hard to tell what DTI ratio a lender will accept until you’re further along in the process. Still, paying down debts is never bad for your financial health. If you have several recurring monthly bills that could make it harder for you to afford a home, work on paying them off, and avoid taking on new debt.

Increase savings and stable income

Lenders want to see that you have enough savings to cover all of the expenses associated with buying a home, as well as cash reserves to address any unexpected bills that may come up. Your savings will have to cover:

• A down payment (for most loan types)
• Closing costs
• Inspections

Additionally, lenders want to see that your income is stable. Applicants who consistently earn about the same amount each pay period are usually viewed as more likely to pay off their debts. Do what you can to boost your savings and stabilize your income before attempting to buy a home. 

Improve your credit score

While a pre-qualification is based on a soft pull or a self-reported credit score estimate, you will eventually have to undergo a hard inquiry to get a mortgage. Therefore, it's important to understand minimum credit score requirements and to make sure you have a strong enough score to qualify for a home loan. 

In general, consumers with a score of 620 or higher will have good odds of approval. Building your score, or rebuilding it after a financial rough patch, can take months of consistent behavior. 

There are no shortcuts, but you can make the most of your positive financial activity by signing up for Kikoff, which allows you to report on-time rent payments. 

Conclusion

Pre-qualification is just the start of your homebuying journey. Before you apply for pre-qualification or pre-approval, focus on strengthening your credit history and boosting your score with tools like Kikoff. 

You can sign up for Kikoff without a hard credit inquiry. Our platform includes a variety of free and paid tools to support consumers who want to retake control of their financial health. Opening a Kikoff credit account and reporting verified rent payments are two of our free, popular services. 

Take a step toward stronger credit habits with Kikoff.