Pre-qualification, Pre-approval or FULL Credit Approval? What’s the Difference?


If you are looking to purchase a home, you may have heard the terms “pre-qualification,” “pre-approval” and “full credit approval.” However, these terms are drastically different and can have an impact on your home-buying process.


A pre-qualification will provide you with a good idea of how much house you can afford. The number is determined by a simple calculation using basic information such as monthly income and monthly debt, and is often verbally provided to you from the lender. It takes no time at all to calculate and with nothing verified, a prequalification is truly a simple estimate.

A pre-approval is achieved after a bit more analysis. It requires the lender to review the verbally provided borrower debt and income information, along with the factual information obtained from a credit report.

A FULL CREDIT APPROVAL looks at your full financial picture and provides you with a full credit approval letter, so you can be more confident when shopping for a home – knowing exactly how much you can purchase and finance. Offering a seller evidence of a full credit approval will position your offer for favorable consideration when the sellers are comparing offers from multiple home buyers, because they know they have a serious buyer. At Westerra Credit Union, you will receive a fully underwritten file on a “To Be Determined” (TBD) property. This is their commitment to assist you before, during and after the transaction.

To finalize the transaction after your offer has been accepted, we will need: A Valid Purchase Contract, Verified Acceptable Property, and a Verified Acceptable Title.

  Pre-Qualification Pre-Approval FULL CREDIT APPROVAL
Credit report required   X X
Income and Assets Documentation required and underwritten     X
Provides accurate and verified information for a confident decision     X

Before you begin working with a lender, be sure to find out if they provide a “FULL Credit Approval.” Contact one of Westerra Credit Union’s experienced Mortgage Loan Officers at 303-321-4209 or stop by any Westerra branch. They would be happy to help you through the process.

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Westerra financially supports the Colorado Homeownership Coalition, which provides mortgage assistance to individuals and families when they need an extra hand. In 2019, Westerra donated $7,640 to help people stay in their homes.

Equal Housing Opportunity.