Pre-approval means that the buyer has secured funding for a property purchase up to a certain amount. The approval is dependent on certain conditions, such as the property appraising to the full purchase price and the LTV to be a certain percentage of the purchase. A buyer that is pre-approved can waive the loan commitment deadline requirement in the contract. It makes the offer stronger as there is no question that he can finance the property. A buyer with a pre-approval is almost as good as a cash buyer.

Pre-qualification is better than nothing but is of very limited value to the seller. What a pre-qualification means is that a lender as preliminary determined that he will most likely be able to extend a mortgage to the potential buyer. The buyer will still need to get full mortgage commitment. Therefore the loan commitment deadline will still be an integral part of the due diligence process that a buyer has to go through.