Pre-qualification

What It Means

Pre-qualification is a preliminary, informal assessment from a mortgage lender estimating how much a borrower — or group of Co-borrowers — might qualify to borrow. It is typically based on self-reported income, assets, and debts, and may or may not involve a credit check. Pre-qualification does not require document verification and is not a lending commitment.

​

Pre-qualification is often the first interaction co-buyers have with a lender. It provides a rough sense of purchasing power but should not be treated as a reliable indicator of final loan approval.

Pre-qualification vs. Pre-approval

​

For co-buyers, the distinction matters because sellers and listing agents typically require a Pre-approval letter — not a pre-qualification — before accepting an offer. A pre-qualification alone may not be competitive in most markets.

Why It Matters for Co-owners

Pre-qualification is useful as an early screening step for co-buyer groups that are still forming or evaluating whether to proceed together. It can surface obvious disqualifiers — such as a co-buyer's debt load being too high — before the group invests in a full Pre-approval process with hard credit inquiries.

​

However, co-buyers should avoid locking ownership percentages or offer decisions based solely on pre-qualification. The financial picture may change significantly once the lender conducts full verification during the pre-approval and Fully Underwritten Approval stages.

Key Points

• An informal lender estimate based on self-reported financial information
• Does not require document verification or a hard credit inquiry
• Useful as an early screening tool for co-buyer groups still evaluating feasibility
• Carries less weight than a pre-approval with sellers and listing agents
• Should not be used as the sole basis for ownership percentage or offer decisions
• Co-buyers should progress to pre-approval before submitting purchase offers