Mortgage pre approval Canada is often the first concrete step toward buying a home. A pre-approval tells you how much a lender is willing to loan, shows real estate agents and sellers you're serious, and helps you shop with confidence. This guide walks you through the pre-approval process and what to expect in Canada.
What is a mortgage pre-approval?
Definition: A pre-approval is a conditional commitment from a lender that tells you the approximate mortgage amount and interest rate you qualify for based on your current income, credit, and debts.
Why it matters: Sellers and agents view pre-approvals as stronger than a simple pre-qualification. It speeds up final mortgage approval once you find a property.
Quick facts Canadians should know
Validity: Most pre-approvals last 60–120 days; some lenders offer longer rate holds.
Down payment rules: Minimums are 5% for the first $500,000 and typically 10% for the portion between $500,000 and $1,000,000; purchases over $1,000,000 generally require 20% down.
Mortgage default insurance: If your down payment is less than 20%, you'll likely need government-backed insurance (e.g., CMHC).
Stress test: Lenders assess your ability to pay at a qualifying rate (the stress test). Check current rules before applying.
For up-to-date guidance on mortgage insurance and down payments, consult the [Canada Mortgage and Housing Corporation (CMHC) homebuying resources].
Step-by-step: The pre-approval process
Check your credit and budget
Pull your credit report and score. Note: a hard credit check may be required by lenders later in the process.
Calculate your monthly budget: include chequing and savings, current debts, and expected housing costs (utilities, property taxes, condo fees).
Gather documents
Checklist:
Recent pay stubs (last 2–3), or Notice of Assessment from CRA.
Employment letter or contract.
Two years of T4s or tax returns for self-employed.
Banking statements (3 months).
ID (driver's licence, passport).
List of assets and liabilities (credit cards, loans).
Proof of down payment source (savings, gift letters, RRSP withdrawal for first-time buyers).
For official tax records, use [CRA My Account] to print Notices of Assessment.
Compare lenders or speak with a mortgage broker
Options: Big banks, credit unions, online lenders, or mortgage brokers who can shop multiple lenders.
Tip: Brokers often have access to lender rates and flexible underwriting for self-employed applicants.
Submit your pre-approval application
Provide documents and authorize a credit check.
Expect questions about intended property type (detached, condo), intended occupancy, and down payment source.
Receive the pre-approval letter
Contents: Maximum mortgage amount, rate (or rate range), term of pre-approval, conditions you must meet.
Common conditions: Continued employment, no large new debts, property type acceptable, final appraisal.
House hunt and finalize mortgage
Once you find a home, the lender will move to final approval which includes appraisal and title review.
The pre-approval makes this final step faster but does not guarantee final approval if circumstances change.
What lenders look at (simple checklist)
Credit score and history
Stable income and employment verification
Debt service ratios: Gross Debt Service (GDS) and Total Debt Service (TDS)
Size and source of down payment
Property type and condo status (if applicable)
Savings and emergency buffer
Common situations and tips
First-time buyers: Consider the Home Buyers' Plan (RRSP withdrawal) and first-time incentives. Use the CMHC and government resources to understand eligibility.
Self-employed: Bring two years' tax returns and financial statements. Lenders may average income.
Multiple credit checks: If you shop for a mortgage within a short window (usually 14–45 days), multiple checks may be treated as a single inquiry — ask your lender.
Rate holds vs true pre-approvals: A rate hold guarantees a specific interest rate for a set period; a pre-approval letter indicates qualification but may not lock the exact rate.
Mistakes to avoid before and during pre-approval
Opening new credit accounts or making large purchases (cars, furniture).
Changing jobs without discussing with your lender.
Overstating income or hiding debts.
Waiting to check your credit — early fixes are easier.
Helpful Canadian links and resources
[Canada Mortgage and Housing Corporation (CMHC) homebuyer information] — mortgage insurance and down payment rules.
[Financial Consumer Agency of Canada (FCAC) mortgage basics] — explanations of the mortgage process and stress test.
[Bank of Canada interest rates] — for current policy rates that affect mortgage pricing.
[CRA My Account] — for tax documents and Notices of Assessment.
Final checklist before applying
Confirm credit score and fix errors.
Save for down payment and closing costs.
Gather documents (pay stubs, tax returns, bank statements).
Decide whether to use a broker or contact lenders directly.
Understand the pre-approval expiry date and conditions.
Getting a mortgage pre-approval in Canada gives you clarity and negotiating power. Start early, gather the right documents, and shop rates so you're ready the moment you find the right home.