Mortgage Pre-Approval
The short version
A mortgage pre-approval is a lender's written confirmation of how much you can borrow, based on verified income, debts, credit and down payment. In Ontario it normally comes with a rate hold, so if rates rise while you shop, you keep the rate you were given. It is not final approval. The lender has not seen the home yet, and financing can still be refused once it does. Getting pre-approved takes a credit check, income documents and proof of your down payment. Most files come back within one to two business days. We arrange pre-approvals across banks, credit unions, monoline lenders and alternative lenders, so the number you get reflects the whole market rather than one institution's rules. Approvals are on approved credit.
What does a pre-approval actually get you?
Three things. A budget you can trust, a rate held for a set period, and credibility when you make an offer.
The budget matters most. Online affordability tools guess, because they do not know how a lender will treat your variable income, your car lease, or the student line of credit you forgot about. A pre-approval runs your real numbers through a real lender's rules. Buyers regularly find the answer is higher or lower than they expected by a meaningful margin, and it is far better to learn that before you fall in love with a house.
The rate hold is insurance. Once the lender commits, your rate is protected for the length of the hold, commonly 90 to 120 days depending on the lender. If rates rise during that window you are unaffected. If they fall, most lenders will pass on the lower rate, though this varies and we confirm it when we place your file.
How is a pre-approval different from a pre-qualification?
A pre-qualification is an estimate. Someone asks what you earn and what you owe, plugs it into a calculator and gives you a number. Nothing is verified and no lender has committed to anything. It is useful for a first conversation and worth very little in an offer.
A pre-approval is underwritten. You provide documents, your credit is pulled, and a lender puts its name to a figure and a rate. Some brokerages and banks blur the two, which is why buyers sometimes discover at offer time that what they were holding was never a real approval. If nobody asked for your documents, you were pre-qualified, not pre-approved.
What do lenders check before they pre-approve you?
Four things, in roughly this order of importance.
- Income you can prove. Salaried applicants need recent pay stubs, a job letter and usually a T4 or Notice of Assessment. If you are self-employed, expect to show two years of filed returns and financial statements, and read our page on alternative and private lending if your filed income understates what you actually earn.
- Your debts. Lenders measure two ratios. Gross Debt Service covers housing costs against income. Total Debt Service adds every other payment you make. On insured files the maximums are 39 percent and 44 percent, and both ratios have to pass.
- Credit. Lenders look at the score, but they look harder at the history behind it. A thin file with two years of clean payments often beats a long file with a recent missed payment.
- Down payment and where it came from. Lenders must see a 90 day history of the funds. A lump sum that appeared last week will be questioned. Gifted money needs a signed gift letter from an immediate family member.
Everything is then tested against the federal stress test. You qualify at the greater of your contract rate plus two percent, or the 5.25 percent qualifying floor that has applied since 2021. With rates where they have been recently, the contract rate plus two percent is almost always the binding number rather than the floor. That test is why the mortgage you qualify for is smaller than the payment you could comfortably make.
Why do pre-approved buyers still get declined?
Because a pre-approval assesses you, and the lender still has to assess the property and re-check you before funding. The failures we see repeat themselves.
- The appraisal comes in below the purchase price, so the lender funds less than expected.
- The property is something the lender will not touch. Small condos, former grow operations, rural properties on wells and septic, and buildings with financing restrictions all show up here.
- The buyer finances a car or opens a credit card between the offer and closing, which moves the debt ratios.
- Employment changes. Moving to a new job with a probation period can undo an approval even at higher pay.
- The condo status certificate reveals a problem with the building's reserve fund or ongoing litigation.
Most of these are avoidable. The short version is that between pre-approval and closing, you change nothing about your financial life, and you keep a financing condition in your offer unless there is a strong reason not to.
How long does a pre-approval last?
Typically 90 to 120 days, and the exact window depends on the lender. If you have not bought by then, we renew it. Renewal is usually quick when nothing has changed, though the lender will want recent documents again and the rate hold resets to current pricing.
What we do differently
Most buyers get pre-approved by whoever holds their chequing account. That gives you one lender's answer. We send your file to the lender whose rules fit it, which matters enormously if anything about your situation is not perfectly standard. Commission income, a recent move to Canada, a business in its second year, or a separation agreement in the background all get treated very differently from one lender to the next.
We also tell you the number you should spend rather than only the number you are allowed to spend. Those are not the same, and the gap is where people get into trouble. Use the calculators to see the monthly cost behind a purchase price before we talk.
Run your purchase numbers
Set a purchase price and see the total monthly cost, the minimum down payment required, and what you would need at closing.
Estimates only, not a rate offer or an approval. Approvals are OAC. See every calculator.
Common questions
Does a mortgage pre-approval hurt my credit score?
A real pre-approval involves a hard credit check, which can move your score by a few points. Canadian credit bureaus group mortgage inquiries made close together and treat them as one shopping event, so working with a broker who submits your file once is easier on your credit than applying to four banks separately.
How long does a pre-approval take?
Once we have your documents, most pre-approvals come back within one to two business days. The slow part is almost always document collection on your side, not the lender.
Can I still be declined after being pre-approved?
Yes. A pre-approval covers you as a borrower, not the specific home. Financing can still fall through if the appraisal comes in low, the property type is one the lender will not fund, your employment changes, or you take on new debt before closing.
Should I get pre-approved before I start looking at homes?
Yes, and ideally before you book your first showing. It tells you what you can actually spend rather than what a website estimates, and in a competitive offer situation a seller takes a pre-approved buyer more seriously.
What happens if my pre-approval expires before I buy?
We renew it. If your income, debts and credit have not changed, renewing is usually straightforward. If rates have moved, the new hold reflects current pricing.
Is a pre-approval a promise that I will get that rate?
It holds a rate for a set window, so you are protected if rates rise during it. If rates fall before you close, most lenders will let you take the lower rate, though the rules differ by lender and we check that when we place your file.