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Posted on Monday, September 26, 2022 in Mortgage Lending

A Crucial First Step: Mortgage Prequalification

For many people, buying a home will be the biggest investment they will make in their lives. It is a huge financial decision that requires careful planning. However, homebuyers often make the mistake of waiting to reach out to a lender until they find the home they want to buy. The earlier you talk to a mortgage lender, the better. That’s where prequalification comes in.

What is mortgage prequalification?

If you’re planning to finance your home purchase, the first step is to get prequalified. Mortgage prequalification is a written statement from a lender stating the loan amount you would qualify for according to their lending guidelines. The determination and loan amount are based on your self-reported income and credit information.

Getting prequalified shows your real estate agent and sellers that you’re a serious buyer who is ready for the financial commitment of buying a home.

Mortgage prequalification does not guarantee that you’ll get a mortgage. Before approving you for a mortgage, your lender will require documentation of your income and assets and will require you to meet specific financial guidelines for the loan type you’re applying for.

What happens if I don’t get prequalified?

To qualify for a mortgage, you must meet specific criteria for income, credit score, down payment, and debt-to-income ratio. Not everyone can prequalify for a mortgage, and not everyone who is prequalified will get a loan.

Here are some steps you can take if you find yourself in this situation.

  • Decrease your overall debt to improve your debt-to-income ratio.
  • Increase your down payment amount. This can help increase the loan amount you would qualify for and lower your monthly mortgage payments.
  • Improve your credit score by taking actions like correcting errors on your credit report, reducing the number of hard credit inquiries, and addressing any red flags, such as missed or late payments.


Mortgage prequalification means a lender has reviewed your finances and, based on factors like your income, debt, and credit history, and determined how much you're prequalified to borrow.

Being prequalified for a loan can give you clarity while planning your homebuying budget, confidence in your ability to secure a loan, and helps sellers know your offer is serious.

Ready to get prequalified? Connect with a trusted, professional mortgage lender with First National Bank to learn more and start your homebuying process today.

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