Mortgage Pre-Approval

Prequalification and preapproval

A prequalification is an estimate from what you tell me about your finances. A preapproval checks your income, credit and down payment, so the number you shop with comes from those documents.

What a preapproval gives you

• A maximum purchase price based on your file
• An estimate of your payment in that price range
• In many cases, a rate hold while you shop, usually for 90 to 120 days depending on the lender
• A stronger position when you make an offer

Documents you'll usually need

If you're employed:

• Photo ID
• A letter of employment showing your start date, position, salary or hourly rate and guaranteed hours
• Your two most recent pay stubs
• Your most recent T4 and Notice of Assessment from the CRA
• 90 days of statements for the account holding your down payment
• Proof of any other income, such as support payments or a second job

If you work for yourself, you'll need two to three years of T1 Generals and Notices of Assessment, plus your business financial statements. If you're incorporated, add your articles of incorporation. If family is gifting part of your down payment, you'll need a signed gift letter. I'll tell you exactly what your lender needs. Please don't send documents through this website.

Protecting your preapproval

• Avoid applying for new credit, including car loans and store financing
• Don't close credit accounts or make large purchases until after closing
• Keep your down payment where it is, and be ready to explain any large deposits
• Let me know about any change in your job or income

What final approval still depends on

Final approval comes after you have an accepted offer. The lender reviews the property, usually with an appraisal, and confirms your documents. If the appraisal comes in below the price, or the property has a problem, the lender can decline the mortgage or change the terms. Keep a financing condition and an inspection condition in the offer so you can step back if that happens.