Pre-qualification is a quick, informal, a lot of times verbal assessment of your financial situation. The pre-approval is a formal process involving verification of your financial information (income and assets) as well as your credit situation. It also involves running your situation through Automated Underwriting System.

Everybody's situation is different. To establish how much of a home you can afford we need to look into a few key factors: your monthly income, your credit score, how much funds you have saved for down payment and closing costs, the interest rate and your current debt situation. It is best to consult with a mortgage professional to properly assess your specific situation.

The minimum down payment required for the First Time Home Buyers is 3.5% of the purchase price. For the repeat buyers is between 5-20% depending on the purpose of the loan. If you want to avoid paying a Mortgage Insurance than you would need to put 20% as a down payment.

The lowest credit score needed to buy a house can vary based on the type of mortgage you're applying for. Generally, the minimum credit score for an FHA loan is around 580 to qualify for the low down payment, which is currently at 3.5%. If you have a credit score between 500 and 579, you can still get an FHA loan, but you'll need a down payment of at least 10%.