Mortgage Pre-Approval in Canada: Step-by-Step

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.

Credit & BorrowingIntermediate
Read time:5 minUpdated: Sep 06, 2025

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

  1. 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).

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.