How to Get Pre-Qualified for a Mortgage

Getting pre-qualified for a mortgage is one of the first actions a buyer can take to begin the home buying journey, bringing them one step closer toward homeownership. Very few home buyers purchase a home without financing. In fact, a 2022 Zillow study showed that 78% of buyers used a mortgage to finance their home purchase.

While optional, a mortgage pre-qualification will provide you with an estimated loan amount that you can then use as a price range to guide you in your search for a home.

What does mortgage pre-qualification mean?

To pre-qualify for a mortgage means you meet a lender’s general guidelines based on the information you provide. Typically, a lender will review your self-reported income, debts and credit to determine an approximate loan amount you may be able to borrow. This process is how a lender pre-qualifies you for a mortgage. Keep in mind, lenders may use different criteria to pre-qualify a person.

While pre-qualification is optional, getting pre-qualified before you begin your home search will help you know which homes will fit best within your budget.

Is pre-qualified the same as pre-approved?

While pre-qualification and pre-approval are two optional steps you can take to begin the mortgage process, they’re not the same process. To get pre-approved, you'll likely need to submit certain verified information — such as W2-s and other tax information — making it a lengthier process than pre-qualification. Pre-qualification, pre-approval may also require a hard credit check to verify your financial information, unlike a pre-qualification. Credit check requirements depend on the lender's pre-approval process.

The advantage of a pre-approval versus a pre-qualification is that a pre-approval is a conditional commitment from a lender to loan you money (as opposed to a pre-qualification which is an estimated loan amount based on self reported information). You’re more likely to be approved for a mortgage once you've been pre-approved as long as your finances don’t drastically change between pre-approval and a fully underwritten application. Pre-approval letters will also generally include an estimated interest rate based on a specific loan program, such as a 30-year conventional loan.

How to prequalify for a mortgage

The mortgage pre-qualification process can be as simple as having a short phone conversation with a lender or completing a pre-qualification questionnaire online. With Zillow Home Loans, you can start the pre-qualification process online. While individual banks and financial institutions may have different pre-qualification practices, here are some general tips to help you get prequalified for a home loan.

Verify your credit score

You'll often be asked to provide your credit score. This is often self reported, unless your lender requests a credit check to verify your score. You can get a free credit history report online from all three major credit bureaus to confirm your current score. Review your credit report at the beginning of your home search to give you time to fix any errors and identify areas where you can improve your credit before you apply for a pre-qualification. Credit score changes can often take 30 days or more to take affect, so the sooner you’re able to make improvements the better.

Most mortgages require a credit score of at least 620. While you may be able to get pre-qualified without a hard credit check, having a higher score makes it easier to pre-qualify for a home loan and can help you secure a lower interest rate when you apply. Some lenders may want to run a soft credit check when you get pre-qualified to verify credit history to provide you with a more accurate loan amount. Soft pulls won’t impact your credit, but hard pulls will.

Check your debt ratio

Another key factor lenders review is your debt-to-income (DTI) ratio. Your DTI is calculated by dividing all your minimum monthly debt payments by your gross monthly income (before taxes). The lower the number, the better. Most lenders require a DTI of no more than 50% for conventional loans. FHA and VA loans often have higher DTI limits.

If your DTI is too high, you may consider applying with a co-signer, so their income is also considered. Together, your combined income and debts may give you a lower DTI and pre-qualify you for a larger loan amount. You can easily check your DTI ratio using Zillow's calculator.

Save for a down payment

A down payment decreases the amount of money you are borrowing and can help you pre-qualify for a larger loan amount, if needed. While some home loans require a down payment between 0% to 5%, borrowers with a larger down payment often receive more favorable credit terms from their lender as they are seen as more of an appealing loan candidate. That’s why saving for a down payment before you get pre-qualified for a mortgage can benefit you. When you have a 20% down payment, you can also avoid the additional monthly cost of private mortgage insurance that is typically required on conventional loans, which will lower your monthly mortgage payments.

Consider applying with a co-signer

A co-signer is someone who shares the financial responsibility for a mortgage with you. There are two kinds of co-signers: those who will live in the home with you and those who will not. Having either type of cosigner on your mortgage application can strengthen it, since both of your incomes, debts and credit scores are considered.

Connect with a lender

Once you’re ready to get pre-qualified for a mortgage, reach out to a local lender like Zillow Home Loans. Every lender has slightly different offerings and qualification criteria, so it’s a good idea to shop around until you find a lender whom you trust and feel comfortable working with.

Your lender will ask you about your income, employment, monthly bills, down payment amount and potentially a few other questions related to establishing your creditworthiness. Then, you’ll be provided with an estimated loan amount you may qualify to borrow. If you’re willing to do a soft credit pull (which won’t impact your credit), some lenders can also provide you with a pre-qualification letter with the estimated loan amount that you can then share with your agent to let them know you’re a serious, pre-qualified buyer.

How to finalize the mortgage

When the time comes around to officially apply for your home loan, you’re not obligated to use the same lender as your pre-qualification (but you can). You should compare rates and terms, as well as your relationship with a lender, as you decide on who to work with.

A pre-qualification is just an optional, first step you can take to understanding how much you may qualify to borrow. To formally apply for a mortgage, you’ll need to complete a loan application with a lender of your choice. During the application process, you’ll be asked to provide several types of documents to verify your financial information.

Once you know the address of the property you plan to buy, have a purchase contract in place and complete a loan application, your lender can begin underwriting your loan and provide you with an official loan estimate. During the underwriting process, a few things will happen like verifying your employment and getting the home appraised. Once processing is complete and your down payment is wired to the title company, you’re ready to close on your new home.

What can I do if I don't get pre-qualified for a mortgage?

If you end up not pre-qualifying for a mortgage or not pre-qualifying for the amount of money you expected, here are some things you can do.

Increase your down payment amount

This lowers the amount of money you’d need to borrow (or increases the loan amount you could qualify for), and helps lower your expected monthly mortgage payments. Learn more about down payments and see why 20% is ideal.

Decrease your overall debt to improve your DTI

A DTI of 36% or less is preferable; 43% is the maximum. You can lower debts by adjusting spending habits, making payment on-time and paying down high-interest credit cards. Use our debt-to-income calculator to estimate your current debt-to-income ratio. 

Work to improve your credit score

You can increase your credit score by correcting any errors on your credit reports, addressing late or missed payments and reducing the number of hard credit inquiries, which happen when you apply for new credit like a credit card or an auto loan. You can also improve credit by paying down credit cards and other debts.

FAQs about the pre-qualification process

*Zillow Home Loans; an equal housing lender. NMLS #10287