Mortgage  Question?
Difference between pre-approved mortgage and home price

I was pre-approved for a $115,000 mortgage but the contract for the home I want to buy is $120,000. Is the $5,000 difference closing costs and are there programs to help pay for the difference?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

Without knowing all the details, the difference between your pre-approved loan amount and the total cost to buy a home is likely your down payment and closing costs. $5,000 is a relatively high number for closing costs for a $112,000 loan so the figure may include your down payment. FREEandCLEAR provides a comprehensive overview of Closing Cost Assistance Programs and Down Payment Grants that can help home buyers pay for all or part of their closing costs and down payment when buying a home.

These programs are typically provided by HUD-approved local housing departments or commissions in conjunction with participating lenders. The housing commission may also offer additional home buyer assistance programs that may be applicable to you. I have provided a link to the HUD web site below where you can select your state and click "Learn About Home Ownership" to be directed to information about mortgage assistance programs in your state.

HUD State Resources Web Site

Additionally, an increasing number of mortgage lenders are offering their own closing cost and down payment assistance grants so we also recommend that you contact multiple lenders to understand the programs they offer. You can review lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as program availability varies. Plus, shopping multiple lenders is the best way to find the mortgage with the lowest interest rate and costs, even if you are already pre-approved. 

We also provide a comprehensive summary of low / no down payment mortgage programs on FREEandCLEAR as well as a helpful comparison of these programs. Each program has different borrower eligibility guidelines and I recommend that you review the resources on FREEandCLEAR to better understand how the programs work. Borrowers can combine a low down payment mortgage program with a closing cost assistance grant to buy a home with a low down payment and to help pay for closing costs. When you contact your local housing commission you can also determine if you qualify for these low / no down payment programs.

In addition to reviewing closing cost assistance and low down payment mortgage programs you may want to consider the NACA Mortgage Program. NACA is a not-for-profit organization that offers mortgage programs designed to make home ownership more attainable. The NACA Mortgage Program enables borrowers to purchase a home with no down payment and no closing costs. We provide a detailed overview of the NACA Mortgage Program on FREEandCLEAR and you can contact NACA by visiting the NACA web site.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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