Mortgage Pre-Approval: A Complete Guide

A pre-approval is a lender's conditional commitment to lend you a specific amount at a set rate, based on a real review of your finances. It is not a guarantee, but it is far more than the online "how much can I borrow" estimate, and getting one should be the first step in any home search.

What a pre-approval actually does

• Sets your ceiling. You know the maximum purchase price a lender will support, so you shop in the right range.
• Holds a rate. Most pre-approvals lock a rate for 90 to 120 days. If rates rise while you shop, you keep the lower one; if they fall, you get the lower one.
• Makes your offer credible. Sellers and their agents take a pre-approved buyer more seriously, which matters in a competitive situation.

What it does not do

A pre-approval is subject to conditions that are only tested once you have a specific property: the appraised value, the property type, the condo documents if applicable, and a final re-check of your credit and income. A pre-approval can still fall through if any of those come back wrong — or if your financial situation changes.

The documents you need

• Income — recent pay stubs and last two years of T4s for salaried income; two years of full tax returns and Notices of Assessment for self-employed or commission income.
• Down payment — 90 days of statements for every account the money is coming from, plus a paper trail for any large deposit. If it is a gift, a signed gift letter.
• Identification and a void cheque.
• Details of existing debts — balances and monthly payments on loans, cards, and lines of credit.

Having these ready is the difference between a pre-approval in two days and one in two weeks.

How to get through it faster

• Do not apply to five lenders individually — each pulls your credit and multiple hard inquiries in a short window can nick your score. A broker submits once and shops the file.
• Answer document requests the same day.
• Do not change jobs, take on new debt, or make large unexplained transfers between accounts during the process.

A pre-approval is worth the hour it takes. It turns "I think we can afford this" into a number you can build a search around, with a rate protected while you look.