A Guide to Mortgage Pre-Approval

Before you start the house-hunting process, there’s an important step you can take that will both save you time and make the process easier: getting pre-approved for a mortgage. A pre-approval helps you understand the home price you can afford, allowing you to budget for your home purchase and focus your home search. With a pre-approval, you’ll also be able to secure a great mortgage rate offer ahead of time and protect yourself from rate increases during your home search.

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What is a mortgage pre-approval?

A mortgage pre-approval is a lender’s conditional commitment to lend you a specific amount of money at a set interest rate before you buy a home. It gives you a clear picture of how much you can afford, what your estimated monthly payments will be, and the rate you could qualify for on your first mortgage term.

Getting pre-approved is free and doesn’t lock you into working with that lender. Most pre-approvals include a rate hold of 90 to 120 days, meaning your offered mortgage rate is protected if interest rates rise while you’re house-hunting. If rates drop, your lender will usually honour the lower rate when you complete your full mortgage application.

Current mortgage rates

Before getting pre-approved, check the latest mortgage rates in Canada to see what lenders are offering. At Ratehub.ca, we compare rates from top banks, credit unions, and brokers to help you find the lowest fixed and variable mortgage rates. View today’s rates in the table below and click “Inquire” to start your pre-approval.

Why should you get pre-approved for a mortgage?

Getting pre-approved offers several key advantages:

• Know your budget: Focus your home search on properties within your price range and avoid wasting time on homes you can’t afford.
• Show you’re serious: Real estate agents and sellers see you as a qualified buyer, which can speed up negotiations.
• Strengthen your offer: In a competitive market, being pre-approved gives you an edge by showing you’re ready to finance the purchase.

Lock in your rate: Most lenders hold your mortgage rate for 90–120 days, protecting you if rates rise — and many will honour a lower rate if they fall.

How to get pre-approved for a mortgage

Getting pre-approved helps you understand how much you can borrow and what mortgage rate you may qualify for. Here’s what the process typically involves:

1. Connect with a lender or mortgage broker: You can apply through a bank, credit union, or mortgage broker. A broker can compare offers from multiple lenders to help you find the best rate and terms.
   
   
2. Provide your financial information: You’ll need to share details about your income, employment, debts, and assets. Common documents include pay stubs, bank statements, investment summaries, and ID.
   
   
3. Choose your mortgage type: Decide between a fixed or variable rate and select a term length (e.g., 3-year or 5-year). With the Bank of Canada expected to hold rates steady, many buyers are weighing the stability of fixed rates against the potential long-term savings of variable options.
   
   
4. Consent to a credit check: Lenders will review your credit score and history to assess your borrowing risk and determine your rate. A score of 680 or higher typically qualifies you with major banks and “A” lenders.

Receive your pre-approval letter: If you qualify, you’ll receive a document outlining your maximum loan amount, estimated payments, and rate hold (usually 90–120 days). This letter gives you confidence to make offers and proves to sellers that you’re a serious buyer.

WATCH: How much mortgage can you afford?

Key factors that affect your mortgage pre-approval

Lenders assess four main factors to determine your maximum mortgage amount and eligible interest rate.

1. Credit score

Your credit score is one of the most important factors in getting pre-approved for a mortgage. It shows lenders how reliably you manage debt and helps them decide whether to offer you their best rates.

• 680–900: You’ll generally qualify with an “A” or “prime” lender, such as a major bank or credit union, and access the most competitive mortgage rates.
• 600–679: You may still qualify with an “A” lender, but approval depends on other parts of your financial profile (like your income and debt levels). Otherwise, you may need to apply with a “B” or “non-prime” lender.
• Below 600: You’ll likely need to work with a “B” or private lender, which often means higher rates and stricter conditions.

Improving your credit score before applying can help you qualify for more lenders and better mortgage rates.

2. Down payment

Your down payment is the amount of money you contribute upfront toward the purchase of your home. A larger down payment can help you qualify for better rates and lower your overall mortgage costs.

In Canada, the minimum required down payment ranges from 5% to 20% of the home’s price, depending on the property’s value.

• Homes under $500,000: Minimum 5% down
• Homes between $500,000 and $999,999: 5% on the first $500,000 + 10% on the remainder
• Homes $1.5 million or more: Minimum 20% down

For example, a house worth $600,000 would require a down payment of at least $35,000.

($500,000 x 5% = $25,000) + ($100,000 x 10% = $10,000) = $35,000

If your down payment is less than 20%, you’ll need to purchase mortgage default insurance (from CMHC, Sagen, or Canada Guaranty) to protect your lender in case you default on the loan.

3. Debt service ratios

Your debt service ratios help lenders determine how much of your income can go toward housing costs and debt payments. These two calculations — the gross debt service (GDS) ratio and the total debt service (TDS) ratio — show whether you can comfortably afford your mortgage alongside your other financial obligations.

Lenders use these ratios to make sure you can manage your monthly mortgage payments, even with existing debts, reducing the risk of default. Generally, your GDS should be below 39% and your TDS below 44% to qualify with most major lenders.

4. Supporting documentation

Depending on the mortgage broker or lender you sit down with, the documentation you’ll need to submit for your pre-approval may vary. For example, some mortgage brokers require proof of income for a pre-approval. Others won’t require proof until your offer has been accepted and you need to finalize your mortgage application.

Here is a list of documentation you may need to provide for your mortgage pre-approval:

• Identification (e.g. Canadian driver's license, PR card or passport)
• Proof of income (pay stubs and letter from your employer, or a notice of assessment if you are self-employed)
• Length of time with employer
• Proof of down payment and ability to pay closing costs (recent financial statements of bank accounts and investments)
• Proof of any other assets like a car, cottage or boat
• Information about other debts including: credit cards or lines of credit; spousal or child support payments; student loans; car leases or loans; and personal loans.

After you’re pre-approved: What to expect

Once you’re pre-approved, you’ll know the maximum amount you can borrow and the mortgage rate you’ve qualified for. Your lender will typically hold that rate for 90 to 120 days, protecting you from increases while you search for a home. Use your pre-approval as a budget guide—it helps you focus on properties within your price range and make stronger offers when you find the right fit.

However, a pre-approval isn’t a final approval. When you apply for your actual mortgage after making an offer, the lender will review the specific property to ensure it meets their requirements. Homes with issues such as asbestos, knob-and-tube wiring, heritage restrictions, or a low appraisal value may be deemed unsuitable and cause your application to be declined.

It’s also wise not to spend up to your maximum limit. Your pre-approval shows how much a lender is willing to loan you, but not necessarily how much you should spend. Buying below your maximum helps you leave room for savings, closing costs, and financial flexibility.

If you need advice, you can always consult a mortgage professional, like a mortgage broker. Mortgage brokers are independent and can give you expert advice on your application for free. They can also help you compare mortgages and negotiate a better rate, and help you through the pre-approval process.

Comparing mortgage pre-approvals by lender

• Scotiabank Mortgage-Pre-Approval 
• Bank of Montreal Mortgage-Pre-Approval 
• TD Bank Mortgage-Pre-Approval 
• Equitable Bank Mortgage-Pre-Approval 
• Peoples Bank Mortgage-Pre-Approval 
• HSBC Mortgage-Pre-Approval 
• Desjardins Mortgage-Pre-Approval 
• National Bank Mortgage-Pre-Approval 
• RBC Royal Bank Mortgage-Pre-Approval 
• motusbank Mortgage-Pre-Approval 
• Simplii Financial ™ Mortgage-Pre-Approval 
• Laurentian Bank Mortgage-Pre-Approval 
• Tangerine Mortgage-Pre-Approval 
• CIBC Mortgage-Pre-Approval