Getting Started 1. Managing Your Money 2. The Home Buying Process 3. Keeping Your Home
How the Process Works
Meet the Professionals
Pre-Qualifying for a Loan
Knowing Your Rights
Mortgage Products and Financing
Preparing for Loan Processing
Loan Closing


What is Pre-qualifying?

To pre-qualify you for a loan, a lender calculates a loan amount you can receive based on information that you provide. Information includes your income, expenses and debts. If you add the earnings of a spouse or parent as a borrower, your pre-qualifying amount will be higher.

Think of this as a preliminary estimate of the loan you might receive. If the information you provide is incomplete or inaccurate, the loan amount will change.

Your lender will use the information you provide to calculate your qualifying ratios. These ratios and any compensating factors will help determine which loan products and financing are best for your situation.

Different loan types have different guidelines for qualifying ratios. Your lender usually will not recommend a loan product until you complete a loan application. However, once lenders determine qualification ratios, they have a preliminary idea of which loan types to recommend. Many lenders use automated electronic systems to help them pre-qualify borrowers for loans.

Later in this lesson, you will learn more about these loan types and how the lender helps you select the best one.

What is Pre-approval?

To pre-approve you for a loan, a lender calculates the loan amount you can receive based on information that a third party provides. The lender verifies your information via a credit report. The credit reporting agency acts as a neutral third party. Consider this a firm estimate of a certain loan amount. Final approval depends on whether the property also meets requirements for a loan.

Searching for Prospective Homes

Your chances of finding the home you want will be better, the more homes you see. Visit as many homes as possible. No one can force you to buy what you do not like and everything about a home, including the price, condition, and features, are negotiable.

Internet Field Trip

Take a brief online trip to go through one of the first steps of pre-qualifying for a loan. You will learn how much house you can afford. Then, you can use a tool to help you search for a specific home by its address and price. Read all the steps before you begin.



  1. Click Calculators - link.
    This will take you to the Home Loan Learning Center Web site.
  2. Locate the "How much house can I afford?" calculator.
  3. Enter the appropriate amounts in the boxes.
  4. Click Calculate. Note: You can change the amounts and see the results.
  5. Click the Close box to return to the course.


  1. Click the What's It Worth link. This will take you to a vendor Web site to check home values.
  2. Locate and click the sample report: Comparable Sales to view the information about similar homes in a neighborhood.

    Note: This vendor charges a fee that varies depending on the type of report. When you know what it's worth, you can negotiate a home's price, features, and almost all other aspects of the property better.

  3. Click the Close box to exit.

Searching for a home takes persistence.

The next section will show you some alternative ways to search and buy a home.



MainGetting Started • 1. Managing Your Money 2. The Home Buying Process3. Keeping Your Home


Click to begin Income and Expense Demonstration