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Conditional approval is a lender’s decision to fund a mortgage once specific outstanding items are satisfied — such as a satisfactory appraisal, updated income documents, or proof of down payment — rather than an unconditional commitment to lend.
Conditions generally fall into two buckets: property conditions (an appraisal coming in at or above the purchase price, confirmation the property is insurable) and borrower conditions (an updated Notice of Assessment, a letter of employment, or proof the down payment has cleared).
Once every listed condition is satisfied and reviewed by the underwriter, the file moves from conditional approval to a firm commitment letter. Missing a condition, or submitting documents that don’t match what was represented on the application, is the most common reason a conditionally approved file stalls before closing.
Documents drive the timeline: the speed from conditional approval to firm commitment usually depends on how quickly the borrower and broker supply the outstanding items.
Applies across lender types: A lenders, B lenders, and credit unions all use conditional approval as a standard underwriting stage, not just an alternative-lending practice.
Broker’s role: mortgage agents (Ontario), submortgage brokers (BC), mortgage associates (Alberta), and courtiers hypothécaires (Quebec) typically manage the back-and-forth of collecting conditions on the underwriter’s behalf.
Not a guarantee: a conditionally approved file can still be declined if a condition cannot be satisfied — for example, an appraisal that comes in below the purchase price.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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