Do I Need to Get Pre-Qualified for a Mortgage?

You are ready to make the big leap and purchase your first home. Your first step is to look into getting a mortgage loan. You may be wondering if you need to be pre-qualified to get a mortgage. This article helps answer your questions.

What Is a Mortgage Loan?

A mortgage loan uses the property being purchased as collateral. That does not mean that the loan must be used to buy property. If you are already a property owner, you can get a mortgage loan using the property you already own as collateral. And you may use that loan to do things other than buy a house. It can be used to build a house, make repairs, build a garage, or even take a vacation. It is up to the borrower. But, if the borrower defaults, the property goes to the lender.

Is It Necessary to Be Pre-qualified for a Mortgage?

Being pre-qualified means you have proof from your lender, usually something in writing, that states a minimum amount they are willing to lend to you. It shows potential sellers that a lender is ready to move forward with your loan should you make an offer on their property. 

This could give you a leg up with the seller if there are multiple offers on a property.  The seller will know you are serious and ready to move forward immediately. 

Is It Better to be Pre-approved or Pre-qualified?

While these two terms sound similar, there is a distinct difference. Just like a tornado watch means the conditions are right for a tornado, being pre-qualified means the lender has taken a quick look at your qualifications and gives you a general amount that you might qualify for. 

Being pre-approved is like a tornado warning. A tornado warning means one has been spotted. When you become pre-approved, the lender has done everything they need to do and has given you an exact minimum amount for your loan. 

Being pre-approved brings you out ahead of someone in a bidding war that is merely prequalified. 

Does Everyone Get Pre-approved for a Mortgage?

Not everyone gets pre-approved for a mortgage loan. When someone is denied pre-approval, it is generally because they have a high debt-to-income ratio. This means that they already have a lot of debt for their income level, and the lender might doubt if they would be able to handle more debt. 

Another main reason for not being pre-approved is a low credit score. A credit score is a three-digit number ranging from 300-850. The higher the number, the better your score. There are three major credit bureaus, Equifax, Experian, and TransUnion. These companies keep track of your entire credit history. 

How to Become Pre-approved

Lenders look at several factors to decide if you qualify for a mortgage loan. The major areas they check are your income, assets, debt, credit score, and the type of property you will be purchasing.

Minimum Income

Lenders want to know you have enough income to make your payments with enough left to pay all your other monthly bills.

They look at all of your income, not just your main take-home pay. Do you receive alimony, child support, or investment income? Everything is considered when deciding if you qualify for a mortgage.


Assets are anything you own of value. There are two types of assets, physical and non-physical.

Physical assets include things like boats, RVs, or jewelry. Non-physical assets could be 401ks, stocks, or bonds.

Amount of Debt

Lenders want to know if your income covers the paying of your mortgage as well as your other debts. The lower your debt-to-income ratio is, the better you look to lenders. 


Becoming pre-approved for a mortgage loan means that the lender has reviewed all your information and given you proof of their approval. You may show this proof when you put in an offer on a property to let the seller know that your offer is serious. Knowing that you are already approved, the seller is more likely to accept your offer.

Not everyone can get pre-approval. You need to make sure that your debt-to-income ratio is not too high and that you have a high credit score.

MortgageWorks offers financing for new home purchase, refinance, home equity, investment property, construction, and a wide variety of loan program options to fit your every need.

Servicing California and the entire Coachella Valley, including Palm Springs, Cathedral City, Rancho Mirage, Indian Wells, Palm Desert, Desert Hot Springs, La Quinta, Indio, and Coachella. Call Art today @ (760) 883-5700

* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.