Prequalification

Definition

An estimate of what you could borrow, calculated from what you declare: approximate income, debts from memory, an estimated down payment. No document is verified and no credit inquiry is made. It sets a search range; it does not reassure a seller. Example: you report $90,000 of income and $500 of monthly debts; the prequalification points to a target price around $420,000. If your pay stubs show $82,000 and a forgotten card adds $150 a month, the pre-approval will land noticeably lower. A prequalification older than a few months, or done before a job change, a new debt, or a rate increase, is worth little. Redo it before writing an offer.