Prequalification
A quick estimate of how much a buyer might be able to borrow, based on numbers they give the lender. It's not verified. Weaker than a preapproval.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
A prequalification is a lender's estimate from numbers the buyer typed in, unverified. An offer resting on one is an offer resting on the buyer's own description of their finances.
Part 2 of 4
A simple example
An offer arrives with a prequalification letter generated online in ten minutes. The buyer has not yet given the lender a single document.
| What the letter shows | What is behind it |
|---|---|
| A prequalification for $320,000 | The buyer's stated income and debts, nothing checked |
| A preapproval for $320,000 | Documents and a credit pull |
| Asking the buyer to upgrade to a preapproval | Common, and a serious buyer can usually do it in a day or two |
Prequalified means the buyer talked to a lender. Preapproved means the lender looked.
Part 3 of 4
What people get wrong
That the two words mean the same thing. Lenders use them differently on purpose, and the difference is verification.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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