finance
prequalification
Prequalification is an informal early estimate of how much a borrower may be able to borrow, usually based on income, debts, and assets the borrower reports without verification. It may not include a full credit review. It helps buyers set a price range, but it is not a commitment to lend. A preapproval is stronger, because the lender verifies documents and credit.
- Exam tip
- Prequalification is based on unverified information; preapproval involves verified documents and credit. Sellers give more weight to a preapproval.
- Example
- After a 10-minute phone call about income and debts, a lender tells a buyer she is prequalified for about $350,000.
Related terms & state variants
Sources
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Last verified: 2026-10-23