Why Pre-Approval Matters
In a market like Toronto, listings can move fast and sellers want to see that a buyer can actually close. A pre-approval letter from a lender or broker gives you a clear budget range and locks in a rate hold for a set period, usually 90 to 120 days. This protects you if rates move while you shop for a home.
- Sets a realistic budget
- Shows sellers you are serious
- Locks a rate hold period
Documents You Will Need
Lenders want to see proof of income, employment history, down payment source, and existing debts. For salaried buyers this usually means recent pay stubs and a letter of employment, while self-employed buyers need tax returns and notices of assessment. Having these ready before you apply speeds up the process considerably.
- Pay stubs or T4s
- Bank statements for down payment
- Two years of tax returns if self-employed
Pre-Approval Is Not a Guarantee
A pre-approval is based on the information you provide and a general review of your finances, but final approval still requires the lender to review the specific property you want to buy. Things like condo status or an unusual property type can change the outcome, so treat pre-approval as a strong estimate rather than a promise.
Working With a Broker
A mortgage broker can shop your file across multiple lenders at once, which often means better terms than going to a single bank. This is especially useful in Toronto where property values and borrower profiles vary widely from one buyer to the next.
Timing Your Application
Try to get pre-approved before you start seriously viewing homes, not after you find one you like. This gives you time to fix any small credit issues and gather documents without the pressure of a closing deadline.
Frequently asked questions
- How long does a pre-approval last?
- Most pre-approvals hold a rate for 90 to 120 days, though this varies by lender.
- Does pre-approval cost anything?
- No, pre-approval is typically free and does not obligate you to use that lender.
- Can my pre-approved amount change?
- Yes, if your income, debts, or credit score change before closing, the final approved amount can be adjusted.