Getting pre-approved for a mortgage is one of the fastest ways to make house hunting more efficient. It gives you a hard budget, shows sellers you are serious, and usually locks a rate for 90–120 days.
The short version: credit, income and down payment documents ready, a lender and a broker compared, and no new debt while the application is open.
At a glance
- Pre-qualification is an estimate; pre-approval is a conditional commitment
- Most approvals take 1–5 business days once documents are complete
- A pre-approval helps you avoid viewing homes outside your budget
- The rate hold matters most when mortgage rates are moving quickly
- If you are a first-time buyer, pair pre-approval with your FHSA and Home Buyers’ Plan
Pre-qualification vs pre-approval
These terms are often confused but represent very different levels of commitment from a lender:
| Factor | Pre-Qualification | Pre-Approval |
|---|---|---|
| Credit check | No (soft check or none) | Yes (hard inquiry) |
| Documents required | None — self-reported info | Full income, employment, asset verification |
| Rate hold | No | Yes — typically 90–120 days |
| Time to complete | Minutes | 1–5 business days |
| Weight with sellers | Low | High — shows you can close |
| Cost | Free | Free |
| Binding on lender | No | Conditionally yes |
Pre-qualification is a rough estimate. Pre-approval is a conditional commitment. Most buyers get pre-approved before making offers.
What lenders assess during pre-approval
Lenders evaluate five core areas.
1. Income and employment
| Employment Type | What Lenders Need | Notes |
|---|---|---|
| Salaried (full-time) | Letter of employment, recent pay stubs, T4 | Simplest to verify |
| Hourly/part-time | 2 years of T4s, pay stubs, employer letter | Must show consistent income |
| Self-employed | 2 years of T1 Generals + NOAs, business financials | Lenders use net income or gross with add-backs |
| Commission-based | 2 years of T4s showing commission income | Lenders average the 2 years |
| Contract/gig income | 2 years of tax returns, contracts | Harder to qualify; brokers deal with more lenders |
| Rental income | Lease agreements, T776 | Typically 50%–80% of rental income is counted |
Self-employed borrowers: Lenders will use your declared income on tax returns. If you aggressively minimize taxable income, your qualifying mortgage amount will be lower. Some lenders offer stated-income programs for self-employed applicants with 20%+ down.
2. Credit score
Your credit score affects both qualification and rate pricing. For an insured mortgage, CMHC requires at least one borrower to have a score of 600 or more; banks set their own thresholds above that for their best rates. Lower scores generally mean a B-lender or private lender at a higher rate, and each lender prices by its own tiers.
You can check your score and report with Equifax and TransUnion before applying and dispute any errors.
3. Down payment
Your down payment must come from verifiable sources. Lenders will trace the origin of funds:
| Source | Accepted? | Documentation Required |
|---|---|---|
| Personal savings | Yes | 90 days of bank statements showing accumulation |
| RRSP (Home Buyers’ Plan) | Yes | HBP withdrawal confirmation |
| FHSA | Yes | FHSA withdrawal confirmation |
| Gift from a relative | Yes | Signed gift letter confirming no repayment required |
| Sale of another property | Yes | Sale agreement, lawyer’s trust statement |
| Borrowed down payment | Limited | Some lenders accept with strong overall application |
| Cash with no paper trail | No | Lenders require documented source of funds |
4. Debt service ratios
Every pre-approval runs your GDS and TDS ratios:
| Ratio | What It Measures | Maximum |
|---|---|---|
| GDS (Gross Debt Service) | Housing costs ÷ gross income | 39% (CMHC insured) |
| TDS (Total Debt Service) | (Housing + all debt) ÷ gross income | 44% (CMHC insured) |
The calculations use the stress test qualifying rate: the higher of your contract rate + 2% or 5.25%.
5. The property (at final approval)
Pre-approval is based on your finances; final approval also depends on the property:
- Appraisal confirms the property value supports the mortgage
- Property condition does not pose risk to the lender
- Condo status certificate is satisfactory (for condo purchases)
- Environmental or legal issues are clear
Documents needed for pre-approval
Prepare these before applying to avoid delays:
| Category | Documents |
|---|---|
| Identification | Government-issued photo ID (2 pieces) |
| Income | Most recent pay stubs (30 days), T4s (2 years), Letter of employment |
| Self-employed | T1 General tax returns (2 years), Notices of Assessment (2 years), Business financial statements |
| Assets | Bank statements (90 days), RRSP/TFSA/FHSA statements, Investment account statements |
| Down payment | Proof of savings, gift letter (if applicable), HBP/FHSA withdrawal confirmation |
| Debts | Credit card statements, car loan statements, student loan balance, line of credit statements |
| Property (if known) | MLS listing, purchase agreement |
How to get pre-approved — step by step
Step 1: Check your financial readiness
Before approaching a lender, run these self-assessments:
- Use the mortgage affordability calculator to estimate your budget
- Check your debt service ratios
- Run the mortgage stress test to confirm you qualify
- Verify your down payment is sufficient
Step 2: Choose a lender or broker
| Option | Pros | Cons |
|---|---|---|
| Big 5 bank | Existing relationship, branch access | Limited to their own products |
| Credit union | May have more flexible criteria | Smaller product selection |
| Mortgage broker | Access to 30+ lenders, rate comparison | Quality varies by broker |
| Online lender | Often lowest rates, fast process | No in-person support |
A mortgage broker is often used by self-employed borrowers or anyone with a non-standard income situation, since brokers deal with more lenders.
If you want the next step after pre-approval, read the home buying process hub for the sequence from offer to closing.
Step 3: Submit your application
The lender will:
- Pull your credit report (hard inquiry)
- Verify your income and employment
- Review your assets and down payment sources
- Calculate your GDS and TDS ratios at the stress test rate
- Determine your maximum mortgage amount
Step 4: Receive your pre-approval letter
A pre-approval letter typically includes:
- Maximum mortgage amount you are approved for
- Interest rate held for 90–120 days
- Term the rate applies to (usually 5-year fixed)
- Conditions that must be met for final approval
- Expiry date of the pre-approval
Pre-approval rate holds — how they work
One of the most valuable features of pre-approval is the rate hold:
| Feature | Details |
|---|---|
| Duration | 90–120 days (varies by lender) |
| What it does | Guarantees you this rate even if rates rise during the hold period |
| If rates drop | Many lenders give you the lower rate, but check the lender’s policy |
| Renewability | Some lenders allow one renewal of the hold period |
| Cost | Free — no obligation to proceed |
In a rising rate environment, a rate hold can save thousands: on a $500,000 mortgage with a 25-year amortization, a 0.25% rate increase adds about $6,000 in interest over a 5-year term.
Common pre-approval mistakes to avoid
- Changing jobs during the process — Lenders may re-verify employment before final approval
- Making large purchases on credit — A new car loan changes your TDS ratio and could disqualify you
- Opening new credit accounts — Hard inquiries and new debt can lower your score
- Moving money between accounts — Large unexplained transfers trigger anti-money-laundering questions
- Co-signing for someone else — Their debt becomes your debt for ratio calculations
- Assuming pre-approval equals final approval — It is conditional until the property is appraised and all conditions are met
How pre-approval affects your credit score
A full pre-approval usually requires a hard credit inquiry, which can lower your score by a few points for a while.
However:
- Rate shopping: scoring models may treat several mortgage inquiries in a short period as one
- The impact fades: a hard inquiry’s effect on the score fades over time, while the inquiry itself stays on your report for 3 years at Equifax and 6 years at TransUnion
Related tools and guides
- How to apply for a mortgage
- Mortgage Affordability Calculator: How much home can you afford
- Mortgage Stress Test Calculator: Test your qualification at the stress test rate
- Debt Service Ratio Calculator: Calculate your GDS and TDS
- First-Time Home Buyer Guide: Complete guide with all programs and incentives
- Home Buyers’ Plan: Using your RRSP for a down payment
- Mortgage Broker vs Bank: Which option is right for you
- Mortgage Rates: Compare current rates across lenders
Sources
The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.
- CMHC: CMHC Purchase
- CMHC: Calculating GDS / TDS
- Financial Consumer Agency of Canada: How long information stays on your credit report
- OSFI: Minimum qualifying rate for uninsured mortgages