Pre-Qualification vs. Pre-Approval

This article is part of the Bank’s “Connections: Life and Money” series. Articles and videos developed to help inform you about issues related to banking, money… and life.

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Understanding the Differences Between Pre-Qualification and Pre-Approval

Do you have questions about mortgages or home equity loans? Mars Bank helps people better understand how banking and in some cases, how personal finance, works.

One subject that can be confusing: What is the difference between being pre-qualified and pre-approved? These terms can be confusing. To the average person looking to buy a home, they might even be considered the same thing. They are not!


To be pre-qualified, the buyer provides basic financial information to a lender that gives a high-level picture of the borrower’s finances. This will include information on debt, income and assets. A pre-qualification is usually a quick process, as the lender only looks at the information the buyer provides and gives a general idea of the amount of mortgage a buyer can afford. The lender may also discuss possible mortgage products that could be a good option for the buyer. This can be helpful, but it is not a guarantee of receiving a mortgage.


A true pre-approval involves more information, including providing the lending institution with documentation that permits them to do an extensive check of the buyer’s finances and credit history. Sometimes, a full application is required to be completed (which may incur a fee at some lenders). The pre-approval process results in a specific mortgage amount and possibly other specific information on interest rate or loan terms. This conditional commitment for a mortgage permits the buyer to look for a home in the specified price range and can be an advantage when there are multiple buyers inquiring about a property.

After Finding a Home

Once the buyer finds a home to buy, those with a pre-qualification will go through the full approval process. The process sometimes get stalled, because the in depth financial analysis reveals issues with the buyer’s credit or down payment which were not disclosed in the pre-qualification process.

Buyers with a pre-approval have gone through the application process and the lender will only require information on the home being purchased. If the home is in the pre-approved price range, an appraisal indicates there is sufficient collateral and are no legal or financial issues with the home (such as liens), then the mortgage will be approved.

Mars Bank is your one true community bank, focused on helping you reach your financial goals by providing the banking services you need. If you have a question, you can contact us securely or call our mortgage/lending office in Cranberry at (724) 776-3803.

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