Buying a new home involves a lot of preparation, especially when it comes to affordability and your ability to get approved for a mortgage. That’s where prequalification can be a great tool.
Prequalification gives you an estimate of how much funding you could be approved for when applying for a home loan. It doesn’t guarantee how much you’ll actually get approved for, but it does give you a starting point to better understand your home loan eligibility and homebuying budget.
What Is Mortgage Prequalification?
Simply put, mortgage prequalification is an estimate of how much you’ll be able to borrow, based on your self-reported income, assets, monthly debt payments, and other financial information. It’s typically quick and easy, and you get a prequalification letter you can use to show sellers your intent and ability to purchase their home.
Remember that the amount you actually get approved for could be higher or lower than this estimate. When it comes to a more formal estimate, you may consider a mortgage preapproval.
How Much Home Can You Afford?
Getting prequalified is a great way to estimate home prices you can afford. Begin your journey toward buying a new home today.
Get Prequalified
Prequalification vs. Preapproval
Prequalification and preapproval operate similarly by providing you with a clearer sense of the mortgage amount you could be approved for. However, they have different levels of requirements, accuracy, and impact in the homebuying process:
| Mortgage Prequalification | Mortgage Preapproval |
|---|---|
|
|
As you’re moving forward with the homebuying process, keep in mind that Freedom Mortgage offers prequalification. Our prequalification process involves a hard credit pull, which can cause a temporary dip in your credit score.
Why Get Prequalified for a Home Loan?
Getting prequalified for a mortgage loan can bring the following benefits:
While the homebuying process can be intimidating, there are many tools and resources available to make it easier. Prequalification is just one of these.
How Do You Prequalify for a Mortgage?
To get prequalified for a mortgage, lenders often ask for some basic information about you and any possible co-borrowers. For example, Freedom Mortgage looks for:
When you’re prequalifying with Freedom Mortgage, we may ask some additional questions to help narrow down the types of mortgages you may be eligible for. You can then decide whether you’d like to apply.
While prequalification isn’t set in stone, it gives you some preliminary information to help guide your home search.
Mortgage Prequalification Requirements
Anyone can seek mortgage prequalification. Your credit, income, and finances affect whether you can be prequalified for a mortgage as well as the estimate of how much money you may be able to borrow.
To be approved for a conventional loan, you’ll likely need a credit score of at least 620 and a debt-to-income ratio (DTI) of 45% or less, though these requirements will vary based on the lender. If this doesn’t match your financial situation, a Federal Housing Administration (FHA) loan or Department of Veterans Affairs (VA) loan might be better suited for you.
Tips for Getting Prequalified for a New Home Loan
If you want to optimize your ability to get prequalified for a mortgage, here are some tips to consider:
Mortgage Prequalification FAQs
We can help you understand the ins and outs of home loan prequalification with answers to some frequently asked questions:
How Long Do Mortgage Prequalifications Last?
Mortgage loan prequalifications are typically good for 30—90 days, depending on the lender. At Freedom Mortgage, our prequalifications last for 90 days. Prospective borrowers can seek prequalification again after the expiration date, though results may shift with changing market conditions and financial health.
Does Getting Prequalified Affect Your Credit Score?
Some prequalifications involve a hard credit pull, including Freedom Mortgage’s. A hard credit check can have a temporary negative impact on your credit score, which is a key consideration for borrowers as they pursue funding. The Fair Isaac Corporation, better known as FICO, states that for most consumers, a hard credit check will lower their credit score by less than five points. Learn more about these credit checks.
Does Getting Prequalified Mean You’ve Been Approved for a Mortgage?
No. Getting prequalified doesn’t guarantee you’ll be approved for a mortgage. It helps you understand the prices of homes you can afford and the amount of money we may be willing to let you borrow. You’ll need to apply for a mortgage to get approved.
Do You Charge a Fee for Mortgage Prequalifications?
Most lenders don’t charge a fee for prequalification. At Freedom Mortgage, we’re happy to prequalify you for a mortgage at no cost.
Final Thoughts: Are You Ready to Get Prequalified?
Prequalification is one step you can take before starting your home search. This way, you’ll have a sense of home prices within your budget and the type of loan you could get approved for. With more information at hand, you can be more confident about finding a home you can afford. Start the prequalification process online today. We’re here to help however you need on the road to becoming a new homeowner.
Victoria Araj is the Senior Director, Managing Editor at Freedom Mortgage. In her 20 years of working for top mortgage lenders, she’s held roles in mortgage banking, public relations, editorial content, and more. She has a bachelor’s degree in Journalism with an emphasis in Political Science from Michigan State University, and a master’s degree in Public Administration from the University of Michigan. She has spoken at several industry conferences, where she’s discussed the importance of editorial content for brands.
You Might Be Interested In
15-Year vs. 30-Year Mortgages
Learn About Interest Rates and Monthly Payments for These Loans
Credit Score to Buy a House: What You Need to Know
Learn More About Credit Scores for Homebuyers
15-Year vs. 30-Year Mortgages
Learn About Interest Rates and Monthly Payments for These Loans
Credit Score to Buy a House: What You Need to Know
Learn More About Credit Scores for Homebuyers
How Long Does It Take to Buy a House?
Typical Time Needed for the Homebuying Process
- ${title}${badge}