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A mortgage pre-approval is a lender’s documented, conditional estimate of how much it will lend a borrower, based on verified income, credit, and debts, usually paired with a rate hold for a set period. It is more reliable than a pre-qualification but is not a guarantee of final financing.
Unlike a pre-qualification, a pre-approval involves an actual credit check and documented income — pay stubs, a letter of employment, and tax documents — run through GDS and TDS at the minimum qualifying rate. The result is a maximum loan amount the lender is willing to extend, subject to the file staying materially the same.
Most pre-approvals come with a rate hold, protecting the borrower from rate increases while they shop for a home. A pre-approval is still not a final commitment: once a specific property is under contract, the lender still needs to appraise it and confirm the file, formalizing the deal in a commitment letter.
Requires documentation: income, employment, and credit are verified upfront — unlike a pre-qualification, which relies on self-reported information.
Calculated at the stress test: the estimated maximum loan amount is based on GDS/TDS at the minimum qualifying rate, not the rate being held.
Usually includes a rate hold: protecting the borrower from rate increases for a period set by the lender while they shop for a property.
Still conditional: final approval requires the specific property to be appraised and the file re-confirmed, formalized in a commitment letter.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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