Overview
Mortgage pre-approval is a crucial step in the Canadian home-buying process. It involves a detailed review of your financial situation by a lender, who then provides a conditional commitment for a maximum mortgage amount, term, and interest rate. This gives you confidence when house-hunting and strengthens your negotiating position with sellers.
Key Mortgage Pre-Approval Requirements in Canada
Identification and Legal Status
- Two pieces of government-issued ID (e.g., driver’s licence, passport, permanent resident card).
- Social Insurance Number (SIN) is often required.
- If you are a newcomer, proof of permanent residency or recent arrival status may be needed, especially if you have less than five years in Canada.
Proof of Income and Employment
- Recent pay stubs (typically two).
- Letter of employment confirming your position, salary, and length of employment.
- T4 slips and/or Notice of Assessment from the Canada Revenue Agency (CRA) for the past two years, especially if self-employed.
- Additional documents for self-employed applicants, such as full personal income tax returns and business financials.
Down Payment and Asset Verification
- Proof of down payment funds, such as bank statements showing a 90-day history.
- List of assets (e.g., vehicles, investments, RRSPs, TFSAs, other real estate).
- Documentation may be required for any gifted down payments.
Debt and Liability Disclosure
- Complete list of monthly debts and obligations, including:
- Credit card balances
- Car loans
- Lines of credit
- Student loans
- Child or spousal support payments
- Existing mortgages or personal loans
Credit Check
- The lender will conduct a hard inquiry on your credit report, which may temporarily lower your credit score. Try to group multiple pre-approval inquiries within 14–45 days to limit the impact.
Additional Factors Considered
- Age of majority: Must be at least the legal age in your province.
- Property location: Pre-approval is valid for properties in Canada (excludes territories for some lenders).
Pre-Approval Process: What to Expect
- Application: Complete an online, phone, or in-person application.
- Documentation: Submit the documents listed above; omissions can delay your pre-approval.
- Conditional Commitment: Receive a pre-approval letter, typically within 24–48 hours, valid for 60–120 days depending on the lender.
- Rate Hold: Most lenders will lock in your rate for up to 120 days.
Why Get Pre-Approved?
- Know your maximum affordable purchase price
- Lock in a mortgage rate to protect against increases
- Strengthen your negotiating power with sellers
- Focus your home search on properties within your budget
Major Bank and Lender Variations
| Lender | Rate Hold Period | Online Application | Special Notes |
|---|
| RBC Royal Bank | Up to 120 days | Yes | Mortgage specialist support; full documentation |
| TD Canada Trust | Up to 120 days | Yes | Immediate online response; newcomer programs |
| National Bank | Up to 90 days | Yes | Excludes territories for pre-approval |
| True North Mortgage | Up to 120 days | Yes | Fast, free, obligation-free pre-approval |
Provincial Notes:
Applicants must be of the age of majority in their province. Some lenders may have specific programs or documentation requirements for newcomers or for properties outside major urban areas.
First-Time Homebuyer Programs
- First-Time Home Buyer Incentive: Shared equity program from the federal government.
- Home Buyers’ Plan (HBP): Withdraw up to $35,000 from your RRSP tax-free for your down payment.
- Provincial rebates: Land transfer tax refunds and other incentives may be available, especially in Ontario, BC, and Prince Edward Island.
Actionable Next Steps
- Gather all required documentation before applying to streamline the process.
- Monitor your credit score and avoid new debts before pre-approval.
- Compare rates and offers from multiple lenders.
- Use theratefinder for a comprehensive platform to compare mortgage rates and find competitive offers from top Canadian lenders. Start your personalized application at theratefinder.ca/onboarding for residential, commercial, or construction mortgage solutions.
- Consult with a mortgage expert to review your situation and maximize your options.
Summary
Canada’s mortgage pre-approval process requires robust documentation of your identity, income, assets, debts, and down payment funds. Taking this step gives you a rate hold and a clear budget, making your home search more focused and credible to sellers. Take advantage of specialized programs for first-time buyers, and always compare rates using platforms like theratefinder for the best possible deal.