How to Get a Mortgage Pre Approval in Canada

A mortgage pre-approval means a bank or other lender has stated that they will lend you a certain amount of money to purchase a house, based on certain terms and conditions.

A mortgage pre-approval is not a firm mortgage approval.

If you’re getting serious about finding a home, a mortgage pre-approval is a key step.

You’ll want to wade into the battlefields of HouseSigma and Zoocasa armed with the knowledge of how much you can spend.

And it’ll show sellers that you’re serious.

You should get pre-approved for a mortgage before you make an offer on a home.

This is so you’re aware of how much you can afford — before you start viewing properties that may be outside of your budget.

Most mortgage pre-approvals will be good for at least a couple of months.

That gives you time to search for a house.

Once a lender gives you a pre-approval, you can narrow down your search criteria.

Then you can start getting in touch with sellers to let them know you’re interested — and start making offers.

Once a seller accepts your offer, all you need to do is tell the bank you’re ready to move forward.

Soon enough, you’ll be a homeowner!

A mortgage pre-approval means a bank or other lender has stated that they will lend you a certain amount of money to purchase a house, based on certain terms and conditions.

They’ll need to evaluate your finances.

They’ll look at how much you make, how much you owe, and your history with debt and repayment.

A mortgage pre-approval is not a firm mortgage approval.

Most banks will include in their pre-approval:

  • A term — the length of time the mortgage will last
  • An interest rate — the percentage interest the bank will charge you on the principal amount
  • The maximum amount they’ll allow you to borrow
  • Your estimated monthly payment
  • Other terms on the loan

Pre-Qualification vs. Pre-Approval

Some lenders allow you to estimate how much you can borrow.

This is called a pre-qualification.

It’s usually a few quick questions online.

The pre-approval process is more in-depth and formal.

If you’re approved, it constitutes an offer of a mortgage from the lender to the borrower (you).

Getting preapproved for mortgage online

How to Get a Mortgage Pre-Approval

Getting pre-approved for a mortgage is a bit more complex than walking into a bank and asking for one.

You’ll need to gather some documents and make some decisions first.

But after that, the process is quite straightforward.

Most lenders offer online applications that can be completed quickly

1. Find out what you can afford

It’s a good idea to use an online tool like TD’s mortgage affordability calculator before you apply for pre-approval.

This will take in your financial information, as well as your housing preferences, and estimate what amount of mortgage you can qualify for.

2. Figure out your down payment

How much money can you put down — right now, all at once — as a down payment on a home?

Remember: in Canada, if your down payment is less than 20%, you’ll need to buy mortgage default insurance.

For most, you should try to make your down payment as large as you can afford.

That’s because any amount you pay right now, you won’t have to pay interest on later.

Others may prefer to put the least amount down and invest the rest.

3. Think about the hidden costs of buying a home

Your down payment and mortgage payment aren’t the only costs you’ll pay when purchasing a home.

There are realtor fees, insurance costs, appraisal fees, land transfer taxes, legal fees, and much more to think about.

You’ll want to budget about 3% to 5% of the home’s cost for these extra fees.

4. Gather your documents

Most lenders will require that you’re a permanent resident of Canada and the age of majority in your province or territory before they’ll let you apply for mortgage pre-approval.

They may also require that the home is already built and that you intend to live in it as your primary residence.

Checked off those boxes? Great.

Before you hit “apply,” gather these documents:

  • Government-issued Canadian ID (like your driver’s license or passport)
  • Social Insurance Number (optional, but can speed up the process)
  • Current address (where you live right now — not the home you’re looking to buy)
  • Previous address (if you’ve lived at your current place for less than 3 years)
  • Value of your assets (like bank accounts, properties, vehicles, and more)
  • Value of your liabilities (like debt, loans, credit cards, and more)
  • Current employment information (a recent pay stub, employer’s address and contact info, and/or a letter from your employer)
  • Previous employment information (if you’ve worked there for less than 3 years)
  • Last 2 years of tax return Notice of Assessments (mainly if you’re self-employed)
  • Financial information of your co-borrower (if applicable)

5. Apply online, by phone, or in-person

Some major lenders like BMO or TD will let you apply for mortgage pre-approval online.

For others, like CIBC, you’ll have to talk to an agent.

All the big banks offer in-person applications.

To apply online, navigate to a lender’s mortgages section and look for “pre-approval.”

Remember: you can get pre-approved by multiple lenders.

But be careful.

Each one may ding your credit score by a few points.

How Long Does a Mortgage Pre-Approval Last?

Most lenders’ mortgage pre-approvals will last for a few months.

This will give you enough time to do some serious searching.

And since the Canadian real estate market is so hot, you might need all of it.

Mortgage pre-approvals can also lock in the interest rate you’ll pay, so in a rising rate environment, they can help you secure a mortgage at a lower rate.

Here are some examples of mortgage pre-approval time limits:

  • BMO: 130 days
  • TD: 120 days
  • RBC: 60, 90, or 120 days

Frequently Asked Questions

  • How far in advance should I get pre-approved for a mortgage?
  • Does a mortgage pre-approval letter affect your credit score?
  • Does a mortgage pre-approval mean you’re approved?

Jack Hauen is a freelance writer and journalist. He has talked to full-time dungeon masters about how they made D&D their full time job, and explained the "crushing sadness" of the downtown Toronto renting experience. His reporting has appeared in Canada's top publications, including the Globe and Mail, Toronto Star and National Post.

If you meet him at a party he might try to explain the ins and outs of credit card churning but will not be offended if you slowly back away. When he's not lurking r/PersonalFinanceCanada, he can often be found in the Algonquin backcountry, already gassed after the first portage of the day.