Prequalification is a lender’s estimate of how much you could be eligible to borrow. You may be asked to supply information about your income, savings, assets, and debt. The lender will review this information and decide how much you might be able to borrow.

Prequalification does not mean you will get the loan. But consider making a prequalification request to help you decide on a price range for your new home. Prequalifications are usually free.

TIP: Just because you prequalify for a certain size or type of loan doesn’t mean it is a good choice for you. It’s up to you to make sure your home loan makes sense for you. The lender will look at your income and other obligations to determine how much it is willing to lend you. You’ll need to review your income, expenses, and savings goals to make sure you can afford the loan and are comfortable with the monthly payments. If you are considering a loan in which the monthly payments could go up, you also need to think about how an increase in the monthly payment will fit in with your budget.