Knowing that there is a difference between being pre-approved and pre-qualified is the first step! An easy way to tell is if your broker has secured a rate for you (pre-approved) or they gave you a couple of rate options to choose from (pre-qualified).

I’ll explore the differences in greater detail below.

The difference between a pre-approval or pre-qualification


  • Secures a rate with a specific lender
  • It has an expiry date


  • Tells you what your buying power is based on the documents you’ve provided
  • There is no rate guarantee

Is one better than the other?

This is a difficult question as they serve different purposes. Basically, It depends on a few factors such as your current buying situation, and whether interest rates are dropping or on the rise.


  • In a nutshell, this means you have had a conversation with your broker, provided documents, and know what your buying power is, or how much of a mortgage you qualify for.

Pre- Approved

  • Let’s say you know you want to buy a home, but you’re not quite ready to make an offer. Rates are on the rise, but you don’t want to feel pressured into buying. This is a good time for you to consider getting pre-approved. Your broker will have a conversation with you to get a high-level idea of what your goals are, review your documents to confirm how much you are qualified to borrow, then find a lender that suits your needs and submit your application to secure a rate.

How long do pre-approvals last

Lenders can provide rate holds anywhere from 30-120 days. They will offer two types of rates – those on live deals and those on pre-approvals. Pre-approvals are obligations sitting on their books (which they don’t want) so they tend to offer the best rates on transactions completing immediately.

If you need to change your mind

A broker usually won’t submit your application to a lender for a pre-approval unless they know you’re a serious shopper. However, life happens and sometimes we have to change course. So yes, you can change your mind; you are under no obligation.

Documents required

To get an accurate pre-qualifying or pre-approval amount, rate quote or hold, you’ll need to provide the following basic documents. Keep in mind that the lender may require additional documents, but this will definitely get you started:

Self Employment Income Verification:

  • Personal T1 Generals – 2yrs Most Recent
  • Personal CRA Notice of Assessments – 2yrs Most Recent
  • Corporate Financial Statements – 2yrs Most Recent
  • Photo ID
  • Signed Credit Authorization

Employment Income Verification:

  • Personal CRA Notice of Assessments – 2yrs Most Recent
  • Most Recent Pay Slip (dated within 30 days)
  • Letter of Employment to confirm position, tenure and income (dated within 30 days)
  • Photo ID
  • Signed Credit Authorization

Property Details:

  • For Existing Properties: Mortgage/LOC Statement + Property Tax Bill + Tenancy Agreement
  • For New Purchase: Purchase Agreement + MLS Listing + Property Disclosure Statement

Down Payment Source Verification:

  • Investments/RSPs: Most recent three (3) monthly statements or last two (2) quarterly statements
  • Bank Statement/TFSA: Most recent ninety (90) day transaction history
  • Sale of Property: Sale Agreement + Recent Mortgage Statement
  • Gifted Source: Signed gift letter + confirmation of funds transfer to your account

List of your assets:

The lender asks for a list of personal assets to show a more complete financial picture. Here are examples of assets

  • Savings – balance and financial institution.
  • RRSP/TFSA – balance and financial institution.
  • Vehicles – year, make and model
  • Stocks, bonds, mutual etc.

What happens when your broker receives your documents

Your broker will review your documents and find out what your buying power is based on your income, credit and debt. Once their review is completed they will call you to discuss your options. This is when you will discuss whether or not it’s in your best interest to move to get a pre-approval.

If you don’t qualify for as much as you thought you would

If your buying power isn’t as high as you’d like it to be, you still have a few options to increase to help you increase it:

  1. Pay off any outstanding debt (eg; car loans, Line of credit, credit cards etc.).
  2. Increase the down payment amount.
  3. Add a co-signer to your application.

More on adding a co-signer:

The biggest effect of having a co-signer on your mortgage application is increasing your buying power.

However, what it means to the co-signer is that their future borrowing may be limited. Therefore,  if they are in the market, or thinking of buying another property in the near future, this might not be the best choice for them.

In Summary

If you are actively house shopping and rates are essentially remaining steady, it is generally a waste of time to get a pre-approval. Remember, pre-approvals are an obligation on the lenders’ books, so they tend to offer the best rates on transactions completing right away. If you’re currently shopping, this applies to you!

On the other hand, if you know you will not be purchasing for a few weeks or months, then it’s definitely in your best interest to get a pre-approval rate hold. If rates drop by the time you are ready to buy, the lender you have the rate hold with will usually drop it to their better rate. If not, your broker will take you to your best option. Finally, remember that you are under no obligation and you can change your mind!