Last reviewed: 3 October 2026
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Prequalification vs. preapproval
People often hear these as two different steps. The CFPB’s answer is that both are letters from a lender, that lenders use the words differently, and that the word on the letter does not tell you much about the process behind it.
What this term means: a “prequalification” or “preapproval” letter is a letter from a lender that says the lender is generally willing to lend to you, up to a certain amount and based on certain assumptions.[1]
What the two letters have in common
The CFPB says both letters specify how much the lender is willing to lend you, up to a certain amount and based on certain assumptions. It says they provide useful information about your likelihood of getting a loan but are not guaranteed loan offers.[1] The CFPB says the letter helps you make an offer on a home because it gives the seller confidence that you will be able to get financing, and that it should provide enough information for sellers in your area to take it seriously.[1] Lenders may check your credit when issuing either letter.[1]
Where lenders’ usage differs
| What the CFPB says | |
|---|---|
| The words | Some lenders use the word “prequalification” and other lenders call the letter a “preapproval.”[1] |
| A usage the CFPB describes | Some lenders offer a prequalification letter based on unverified information that you report, and will only issue a preapproval letter based on verified information.[1] |
| A written commitment | In connection with a prequalification or preapproval request, some lenders may issue a written commitment letter, valid for a certain period of time, to extend a loan up to a specified amount subject to limited conditions.[1] |
| What the word tells you | The CFPB says lenders’ processes vary widely and the words they use do not tell you much about a particular lender’s process, even if the process may result in legal differences.[1] |
Our own list of questions a reader can ask (not the CFPB’s): what information it is based on, what assumptions it states, how long it is valid, and what conditions apply. The CFPB’s own suggestion for making sure a letter will serve its purpose is to ask a local real estate agent or a housing counselor.[1]
When people get one, and what happens if you are told no
The CFPB notes that many people wait to get a preapproval letter until they are ready to begin shopping seriously for a home, and that getting preapproved earlier can be a way to spot potential issues with your credit in time to correct them.[1] It also says that even if you have not submitted a formal loan application, a lender that evaluates your creditworthiness and tells you that you do not qualify for a prequalification or preapproval letter must provide you with an adverse action notice.[1] Our guide to adverse action notices covers that notice.
How to verify this yourself
Read the CFPB page in the reference list; it is the source for each statement above. Then read your own letter for the amount it states, its assumptions, and any validity period or conditions, and ask the lender in writing what information it is based on and whether that information has been verified. For a licensed loan officer, you can verify the license in NMLS Consumer Access. The questions to ask your loan officer page lists further items from CFPB pages. A HUD-approved housing counselor can also review a letter with you (how to find one).
What this page does not cover
This page is general information, not legal or financial advice, and covers the United States only. It does not compare lenders or rates, does not say which kind of letter you need, and does not say whether you would qualify for a loan; that depends on your own facts and the lender’s and any loan program’s rules. The CFPB page was last reviewed 5 December 2023; this page was last reviewed 3 October 2026.