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Shopping for houses can be fun, but putting together the financing to buy that house with the Pinterest-worthy kitchen seems…complicated. A good first step? Getting an estimate of how much you may be able to spend and showing sellers that you’re a serious buyer. That’s where prequalification and pre-approval can help.

So let’s breakdown the difference between prequalification and pre-approval and when to do which.

Mortgage prequalification: A good first step.

Getting prequalified at the start of your home-buying journey is a quick, easy way to see how much you may be able to qualify to borrow for a mortgage. All you need to do is give your lender some basic financial information like your estimated household income and debt and you’ll get your estimated price range in minutes online.

And depending on the type of prequalification the information you provide may not go through the process of getting verified by the lender, so it may not affect your credit score. But it’s also wise to recognize that the amount you may qualify to borrow may be more than you’ll want to spend (so you have money left over to upgrade the washer and dryer or buy new furniture, for example).

When to get prequalified

Get prequalified before you start house hunting, so you can feel confident you’re looking at houses in the right price range for you.

Prequalification helps you see how much you might be able to borrow.

Prequalify

Mortgage pre-approval: Making it official.

When you get pre-approved, on the other hand, the lender is giving you approval for a specific loan amount under certain conditions. You’ll give your lender more detailed financial information, like pay stubs, bank statements and tax returns, and they’ll do an in-depth review of your financial situation to determine the loan amount and terms they’ll agree to. Because the process is much more detailed, it takes more time too – up to a week in some cases.

Pre-approval can help you in the home-buying process by allowing you to act quickly when you find the perfect home and proving to the seller that you have the resources to make the purchase. And if a seller’s getting multiple bids, having a mortgage pre-approval can help you stand out from the rest.

When to get pre-approved

You may want to get pre-approved if you’ve already defined your price range, have a real estate agent and are currently shopping for homes. A pre-approval is usually only good for 90 days and it will likely show as an inquiry on your credit report, so consider holding off on applying for pre-approval until you’re ready to start making offers.

When you’re ready to start house hunting, getting prequalified and pre-approved at the right time can help. With a prequalification, you can feel confident knowing you’re looking at houses in the right price range for you. And getting pre-approved for a mortgage helps you act quickly and show sellers you’re serious about making an offer. Two useful tools to streamline the mortgage application process and get you from house hunter to homeowner.

Let’s get you closer to your new home.

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Disclosures

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.