Pre-Approval Letter
Understand what a pre-approval letter is in Canadian real estate, what it includes, and how it helps buyers make competitive offers.
May 22, 2025
What is a Pre-Approval Letter?
A pre-approval letter is a document issued by a lender that states a buyer has been conditionally approved for a mortgage up to a specified amount, based on a preliminary review of their financial profile.
Why Do Pre-Approval Letters Matter in Real Estate?
In Canadian real estate, a pre-approval letter helps buyers prove their seriousness to sellers and strengthens their offer in competitive markets. While it’s not a final loan commitment, it provides a detailed snapshot of the buyer’s borrowing power.
Pre-approval letters typically include:- Maximum loan amount
- Estimated interest rate and term
- Conditions (e.g., property appraisal or documentation)
- Validity period (usually 60–120 days)
Having a pre-approval letter can speed up the closing process and reassure sellers that the buyer is financially qualified.
Understanding the role of a pre-approval letter helps buyers shop within their budget and act quickly on desired properties.
Example of a Pre-Approval Letter in Action
A buyer presents a pre-approval letter showing they are approved for up to $750,000, giving the seller confidence to accept their offer.
Key Takeaways
- Confirms preliminary mortgage approval.
- Strengthens buyer credibility.
- Based on credit and income review.
- Contains loan amount and terms.
- Not a final commitment.
Related Terms
- Mortgage Pre-Approval
- Conditional Approval
- Mortgage Qualification
- Interest Rate
- Financing Condition
An overview of Hedge Road Landing. (Alliance Homes)
6525 Mississauga Road and its surrounding context. (RBC Capital Markets & CBRE)
Property details for 6525 Mississauga Road. (RBC Capital Markets & CBRE)
National average resale-price growth and housing-starts growth, smoothed over three months. The comparison illustrates the cycle; it does not establish how much a price change causes construction to change.
Trailing 12-month starts in centres of 50,000 or more remove the usual monthly seasonality. Ownership combines the homeowner and condominium categories; rental is shown separately.
Six-month averages of provincial starts, expressed at annual rates. The smoothing reduces the influence of individual apartment projects.
The same August benchmark compared with two different starting points. Three-month changes are not annualized.
Average sale prices show the difference in purchase costs across markets. They do not measure affordability relative to local incomes or construction costs.
Newfoundland and Labrador remains above its pre-pandemic sales pattern, but August activity was below last year. Historical lines retain their original release vintages.
Average and median describe different aspects of the same month’s transactions. Both are affected by the mix of homes sold.
Category averages compare different homes and locations; the gaps are not estimates of the cost to upgrade an otherwise identical property.
The five categories shown account for 5,000 of the board’s 5,057 sales. The remaining 57 transactions were in other housing categories.
Monthly observations are not seasonally adjusted. Active listings count properties available at month-end; they are not construction inventory.
Average and median prices share one dollar axis. These unadjusted transaction measures do not control for changes in the homes sold.
TRREB’s 416/905 categories compare the apartments sold in each area. The difference does not isolate a location premium for equivalent units.
Highlights from the Delta Golf & Country Club listing brochure. (Colliers)