Skip to main content

Learn About Mortgages

Learn About Mortgages

Find out how much house you can borrow before you start looking – and how you can make the strongest offer possible on the property you choose.

If you’re ready to make your dream of owning a home a reality, you’ve probably already heard that you should consider getting prequalified 1 or preapproved 2 for a mortgage. It’s time to understand exactly what each of those terms means and how they might help you. And when you’re working toward a goal this big, you want every advantage.

Ready to prequalify or apply? Get started

Homebuyer tip:

You may qualify to borrow more money than you are comfortable spending on a home. But that doesn’t mean you have to spend more. It’s a good idea to limit your home search to houses priced at an amount you can comfortably afford. Explore the mortgage amount that best fits into your overall budget by using Bank of America’s Home Affordability Calculator

What is mortgage prequalification?

Prequalification is an early step in your homebuying journey . When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide about your finances, as well as a credit check.

Prequalification is also an opportunity to learn about different mortgage options and work with your lender to identify the right fit for your needs and goals.

What is mortgage preapproval?

Preapproval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. You will complete a mortgage application and the lender will verify the information you provide. They’ll also perform a credit check. If you’re preapproved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, good for 90 days.

Homebuyer tip:

Expect surprises! Lenders look at every detail of your finances when granting preapproval. You might be asked about a car loan payment you made with a credit card, for example. Be prepared to answer lender questions as soon as they come up.


Getting preapproved is a smart step to take when you are ready to put in an offer on a home. It shows sellers that you’re a serious homebuyer and that you can secure a mortgage – which makes it more likely that you’ll complete your purchase of the home.

How long does prequalification or preapproval take?

Aside from their distinct roles in homebuying, prequalification and preapproval can take different amounts of time. Prequalifying at Bank of America is a quick process that can be done online, and you may get results within an hour. For mortgage preapproval, you’ll need to supply more information so the application is likely to take more time. You should receive your preapproval letter within 10 business days after you’ve provided all requested information.

What information do I need to provide?

PREQUALPREAPPROVAL
Income informationCopies of pay stubs that show your most recent 30 days of income
Credit checkCredit check
Basic information about bank accountsBank account numbers or two most recent bank statements
Down payment amount and desired mortgage amountDown payment amount and desired mortgage amount
No tax information requiredW-2 statements and signed, personal and business tax returns from the past two years

Which is right for me?

First-time homebuyers are more likely to find that getting prequalified is helpful, especially when they are establishing their homebuying budget and want an idea of how much they might be able to borrow.

Preapproval can be extremely valuable when it comes time to make an offer on a house, especially in a competitive market where you might want to stand out among other potential buyers. Again, a seller will be more likely to consider you a serious buyer because you have had your finances and creditworthiness verified.

Ready to prequalify, get preapproved or apply? Get started with the Digital Mortgage Experience .

PREQUALIFICATION VS. PRE-APPROVAL COMPARISON

 PREQUALPREAPPROVAL
BenefitsYou can start house-hunting knowing how much you might be able to borrowYou’ll be ready to make an offer with confidence—and gain a competitive advantage
ProcessProvide basic information to a lender and quickly get a prequalification amountAfter submitting documentation to a lender, you should receive a decision within 10 business days
DocumentationAnswer questions for this process, plus a credit checkProvide proof of financial details, plus a credit check

Learn more about the benefits of prequalification and preapproval

View Transcript

As you look for a home, you may be asked to get prequalified or preapproved. Before you start, it’s important to understand the difference. When you want to talk to a lender to establish a general range of home prices, you can get prequalified, which is simply a lender’s estimate of what you could potentially borrow. This can be completed easily and conveniently online, in person, or over the phone in just a few minutes with basic information like your income and expected down payment. When you want to give yourself a competitive edge over other buyers in the market, you can get preapproved. Having a preapproval lets sellers know that you already qualify for the home financing which greatly increases your chance of having your offer selected. Unlike prequalification, preapproval is a more specific estimate of what you could borrow from your lender and requires documents such as your W2, recent pay stubs, bank statements and tax returns. The lender will then use these documents to determine exactly how much you can be preapproved to borrow. Once you’re preapproved, you’ll have 90 days to find a home you love. Then you can lock your rate and complete your application. Whether you choose to get prequalified or preapproved, you will have a better sense of what’s in your price range and can hunt for a house with confidence.