Pre-qualification is usually done verbally and a loan application is not submitted.  A loan originator has not yet looked at W-2’s, employment records, and other documents pertinent to an actual loan approval.  Pre-qualification does not guarantee you would be a loan in the amount the originator suggests you might be able to afford.  

A pre-approval requires much of the same information as the pre-qualification in addition to the extra documentation and usually has forms for the possible borrow to complete.  Most agents prefer working with people who have gained pre-approval.  

In some cases, you may need $0 down to purchase a home. I have gotten some past clients a check at closing for the money that they had used to put down. With the Texas Home Buyers Assistance Programs,  I'd say that what you would put down as a deposit and your first months rent on a rental property is what I can easily get you into a home for. However, in most cases, you will need to put down a percentage of your home.  Through certain loans called FHA loans, you can put down as little as 3.5%.  So for a $170,000 home, you would pay a $5950 downpayment.  Conventional loans can start as low as 5%.  

• Earnest Money - This payment basically shows consideration in good faith.  It’s runs from $500 on up generally, though no amount is set.  If you put in an offer and it is accepted, the money is deposited and will be used toward your purchase.  

• Option Fee - The buyer gives this amount to the seller to take the property off the market.  The buyer can cancel at any time but the seller has agreed to not sell the property to anyone if they accept the option fee. This fee generally runs anywhere from $50 to $500 and is set by the buyer and seller.  This fee can be credited toward the purchase of the home.  

• Inspection Fee - Most people have an inspection on the home they are considering purchasing. This helps to identify any problems that might have to be fixed.  Anything that comes out of the inspection may change the price you may be willing to pay.  Before the option period is up, a buyer must negotiate what will be repaired, removed, fixed, etc by the seller or the buyer. The option period may be extended at this time.  Inspection fees begin at $200. 

• Appraisal Report - Lenders want to make sure they re putting their money toward what the house is appraised.   This usually costs about $300- $500.  

• Closing Costs - Closing costs include items that need to be pre-paid and that have been determined by the seller, lender and buyer.  Items can include homeowners insurance, property tax reserves, and interest.