Mortgage Pre-Approval in Canada: What It Holds, What It Proves and What Breaks It
A mortgage pre-approval does two things: it holds a rate for 90 to 120 days, and it tells you the loan size a lender will entertain. It is qualified not at the rate you were quoted but at the higher of that rate plus 2% or 5.25%, which is why the number comes back smaller than an online calculator suggested. What it is not is a commitment to lend — that arrives only after the lender has seen the property and re-checked everything you told them.
Apply nowPre-qualification, pre-approval and approval are three different things
| Stage | What is checked | Rate held? | Worth to a seller |
|---|---|---|---|
| Pre-qualification | What you tell them, unverified | No | Close to nothing |
| Pre-approval | Credit pulled, income and down payment documented | Yes, 90–120 days | Real, and the basis for a firm offer |
| Approval (commitment) | All of the above plus the specific property and appraisal | Held to closing | Final |
The gap that catches people is the middle one. A pre-approval assesses you. It says nothing about the property, so a lender who liked your file can still decline the deal over the building, the condo corporation’s financials, the appraisal coming in short, or a rural well and septic.
The arithmetic behind the number
Two ratios decide the size, and both are calculated at the qualifying rate rather than your contract rate:
- GDS — mortgage payment, property tax, heat, and half of condo fees, against gross income.
- TDS — all of that plus every other debt payment: cards, lines, car, student loans, support.
The qualifying rate is the higher of your contract rate plus 2% or 5.25%. On a 4.29% quote you are tested at 6.29%; on a 3.00% quote you are still tested at 5.25%. Nothing you do to the contract rate moves the test much, which is why shaving a tenth off the rate rarely changes what you qualify for while clearing a $400 monthly card payment usually does.
Work your own ratios with the GDS/TDS calculator, then see the effect of the test with the stress test calculator.
What to have ready
A pre-approval moves at the speed of your documents. Salaried files are usually same-day once these are in hand:
- Letter of employment and a recent pay stub, dated and naming your base salary.
- T4s and Notices of Assessment for two years — two years is standard, not one.
- 90 days of history on the down payment account, showing the funds and where they came from.
- Gift letter, if any part is a gift, naming the giver and confirming it is not repayable.
- Mortgage statement, property tax bill and lease for any property you already own.
Variable income is the common complication. Bonus, commission and overtime are usually averaged over two years and often haircut, so the figure a lender uses is rarely the figure on your last stub. Self-employed files are assessed differently again — see self-employed mortgages.
Lendmax publishes the full document checklist if you want to assemble the file before you speak to anyone.
What breaks a pre-approval after it is issued
A held rate is not a frozen file. Lenders re-verify before closing, and these are what actually unwind deals:
- New debt. Financing furniture or a car between pre-approval and closing re-runs TDS at a worse number. This is the most common cause.
- A job change. Even a raise, if it moves you to commission, to contract, or into a probation period.
- A credit score drop. Missed payments, or a cluster of new applications.
- The down payment moving. Funds that arrive from an undocumented source restart the 90-day trail.
- The property. A short appraisal means the lender funds on their value, not your price, and you cover the difference.
- Expiry. Past 90 to 120 days the hold lapses and you are repriced at the board of the day.
Where to go next
- 5-year fixed rates and 5-year variable — what a hold would be priced against today.
- First-time buyer mortgages and the FHSA.
- Maximum purchase price calculator.
- Lendmax: get pre-approved — the application itself.
- Lendmax: how much mortgage can I afford.
Common questions
How long does a mortgage pre-approval last?
Typically 90 to 120 days depending on the lender. The rate hold expires with it; after that the file is repriced against the board of the day.
Does a pre-approval guarantee I will get the mortgage?
No. A pre-approval assesses you, not the property. The lender still has to accept the specific home and its appraisal, and will re-verify your income, debts and down payment before closing.
What rate am I qualified at?
The higher of your contract rate plus 2% or 5.25%. A 4.29% quote is tested at 6.29%. This is why a pre-approval comes back lower than most online affordability calculators suggest.
Does a pre-approval hurt my credit score?
It involves a hard credit check, which can move a score slightly. Several mortgage enquiries in a short window are generally treated as one event, so shopping within a couple of weeks is not penalised the way unrelated applications are.
Can I still be declined after a pre-approval?
Yes. New debt, a job change, a credit score drop, an undocumented change to the down payment, or an appraisal below the purchase price are all common reasons a pre-approved file does not fund.
How much down payment do I need to be pre-approved?
5% on a purchase price of $500,000 or less, 5% of the first $500,000 plus 10% of the portion above it up to $1,500,000, and 20% at $1,500,000 or more.
Qualifying rate (the higher of contract rate plus 2% or 5.25%) and insured amortization: CMHC. Minimum down payment tiers: Financial Consumer Agency of Canada. Rate-hold periods are lender policy and vary; the 90–120 day range reflects the shelf this board is priced from. Verified 4 November 2026.
Want a pre-approval that holds a real rate?
When you are ready to do something with these numbers, we will introduce you to a licensed broker who can put the file in front of lenders. Nothing here obliges you to.
