A preapproval is a lender’s look at your finances before you shop. It estimates the most it may lend you and at what rate, so you can search in the right price range and make an offer with confidence. It may also be called prequalification or preauthorization. Source: Financial Consumer Agency of Canada.
The rate hold
Many lenders hold the preapproved rate for 60 to 130 days, depending on the lender. Ask how long yours lasts, and whether you get a lower rate if rates fall before you buy.
What lenders ask for
- Identification.
- Proof of employment and income: a recent pay stub and your position and time with the employer, or your notices of assessment for the past two years if you are self-employed.
- Proof of the money for the down payment and closing costs, such as bank or investment statements.
- Your other assets, such as a car or a cottage.
- Your debts: credit cards, lines of credit, car and student loans, and support payments.
The lender will usually check your credit report.
It is not a final approval
A preapproval does not guarantee the mortgage. The final amount also depends on the home’s value, your down payment and any change in your income or debts before closing. Keep a financing condition in your offer, and avoid new debt until you close.
Check the numbers yourself first
Lenders qualify you at the stress-test rate and against debt service limits. See where you stand with the affordability calculator and the GDS and TDS calculator, read the stress test guide, and compare offers with the mortgage comparison calculator.
Try the affordability calculator →
Official source
FCAC · Getting preapproved for a mortgage
This guide explains general rules. Confirm your figures with your lender, lawyer, or the official source before you act.