Pre-Approval

Learn what mortgage pre-approval means in Canadian real estate, how it works, and why it’s crucial for confident and informed home buying.

May 22, 2025

What is a Pre-Approval?

Pre-approval is a lender’s preliminary review of a buyer’s finances to determine how much they may qualify to borrow for a mortgage.

Why Pre-Approval Matters in Real Estate

In Canadian real estate, getting pre-approved helps buyers understand their purchasing power and signals financial readiness to sellers. It often includes a soft credit check, income verification, and debt analysis.

Key details provided in pre-approval include:

Maximum loan amount
Interest rate (often rate-locked for 60–120 days)
Estimated monthly payments
Mortgage term and amortization

Pre-approval is not the same as final approval. Buyers must still satisfy conditions once they make an offer on a property. It helps avoid surprises and narrows the home search to realistic price points.

Understanding pre-approval ensures smoother home shopping and stronger offers in competitive markets.

Example of Pre-Approval in Action

A buyer receives pre-approval for a $650,000 mortgage, with a 5-year fixed rate locked in for 90 days while they search for a home.

Key Takeaways

Helps buyers define a realistic budget.
Indicates borrowing capacity and rate.
Valid for 60–120 days.
Not a guarantee of final approval.
Strengthens purchase offers.

Related Terms

Mortgage Qualification
Pre-Approval Letter
Financing Condition
Debt Service Ratios
Interest Rate

        
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