Differences Between Mortgage Pre-Qualification, Mortgage Pre-Approval, and Mortgage Commitment

PreApprove vs PreQualify


Realtors will often times suggest that the first step when buying a home is to get pre-qualified for a mortgage loan. It is important to know the difference between the terms pre-qualification, pre-approval and mortgage commitment as they are often used interchangeably and therefore sometimes confusing and misleading. Although related, they signify different levels of approval.  


Pre-qualification does not typically include an analysis of your credit report/rating or an in-depth look at your true ability to buy a home by analyzing your income, assets and debts. You simply provide your income and debt obligation information to the lender and they estimate the maximum amount you can borrow without verifying the information that you provided.

Pre-qualification does not guarantee an interest rate or mortgage approval but gives you a general idea of the price range you can afford before you start looking for a home.


The pre-approval process is more formal. The lender checks your credit report/rating and looks closely at your income, debt obligations and net worth, then confirms the maximum amount of loan you qualify for, which loan programs you qualify for, and guarantees the interest rate for a length of time (usually 90-120 days). Pre-approval gives you confidence to go shopping for a home but it still isn't a guarantee that the lender will approve the loan because the home that you will eventually buy is a key factor in the mortgage approval because it will be the security for the loan. A pre-approval letter however, strengthens your position to make an offer when you find a property that you like because sellers are generally more willing to accept offers from pre-approved buyers.


A mortgage commitment is what a lender issues after they have approved your credit, income, and the home that you are purchasing. An appraisal of the home must meet the lender's guidelines. Other conditions for commitment include free-and-clear title of the home (i.e. no right-of-way issues, pending lawsuits, outstanding liens that cannot be paid at closing, etc), home insurance and sometimes another check of your credit report before closing to make sure it hasn’t changed negatively.

The mortgage commitment letter is issued only when the lender is sure they will grant the loan, but it is not uncommon to issue it subject to approving you and the house.

In conclusion, please get pre-approved before you start looking at homes to buy. If you don't have a mortgage broker, we can recommend 3 different brokers for you to interview and see if any of them will be a good fit to help you. Just call or text us at (604) 800-2044

Buying or selling your home doesn’t have to be stressful. Remember… when you seek our help, you will have a memorable experience.

I hope you found this information helpful.

If you have any questions feel free to contact us here.