Pre-qualification
A preliminary, informal estimate of how much you might borrow, usually based on self-reported information without a full document review or hard credit pull. Faster than pre-approval but carries less weight with sellers.
How does this affect your loan? Estimate self-employed qualifying income with the
DTI calculator, or read the
self-employed mortgage guide.
Related terms
- Underwriting — The lender’s detailed verification and risk assessment of your application. An underwriter reviews income, ass…
- Compensating factors — Strengths in your application that offset a weakness elsewhere. Common examples: large reserves offsetting a h…
- Overlays — Lender-specific requirements stricter than the minimum guidelines set by Fannie Mae, FHA, or the non-QM progra…
- Conforming loan limit — The maximum loan Fannie Mae and Freddie Mac will purchase. For 2025, the baseline limit is approximately $806,…
- Reserves — Liquid funds you must demonstrate after closing — not applied to the down payment or closing costs. Measured i…
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Sources
Educational definition only — not financial, legal, or tax advice. Programs and limits change; verify current terms with a licensed professional.