Aren’t They the Same Thing?

There is often confusion about the difference between getting “prequalified” and “preapproved” for a loan.  Don’t they mean the same thing? It’s common to think so, but they’re actually different.


Getting prequalified means that you’ve contacted a VA Loan Specialist (also referred to as a Loan Officer), allowed them to review your credit, and provided them verbal information regarding your assets & monthly income. He or she determines an approximate monthly payment for the proposed loan and makes sure that the Debt-to-Income (DTI) ratio (how much you make vs. how much you pay out in monthly expenses each month) is within tolerance. The process can take as little as 15 minutes over the phone.Prequalification is an informal process that is quite simple, but adds a level of risk that the information may be misinterpreted once the loan officer has reviewed the actual income and asset documentation. Why? A lender’s calculations are often different than how a borrower may calculate them.


Getting preapproved takes your home loan inquiry a step further. Once you are prequalified, the loan officer provides you with a list of documentation needed for review in order to verify the figures provided. You’ll likely sit down together, he or she will make any adjustments to income and assets per the verification of documents and submit the loan through an Automated Underwriting System (AUS) to determine the approval & eligibility.

This process is much more thorough and gives both the borrower (you) and the real estate agent the added assurance that financing should move smoothly.

Here’s a list of the documents your loan officer may ask for in order to complete a preapproval:

  • Most recent LES or pay stub (total of one month).
  • Most recent 2 years of Federal Tax Returns (including all schedules & W2s).
  • Most recent 2 months of bank statements showing assets that will be used for closing.

Keep these differences in mind when you’re interviewing your loan officer and be sure that your documents are reviewed and you’re preapproved before your offer on a home has been accepted. Some folks who do not get preapproved prior to making an offer find that they no longer qualify for the loan and their purchase might be in jeopardy.

Contact Hawaii VA Loans to get started!