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If you’re planning to buy a home in Canada, you’ve probably heard the terms mortgage pre-approval and pre-qualification tossed around. They sound similar—and people often mix them up—but they’re not the same thing.

So what’s the difference?

In simple terms:

Pre-qualification is a quick estimate of how much you might be able to borrow.

Pre-approval is a more official process that tells you how much you’re actually approved to borrow—based on your credit, income, and documents.

What Is a Mortgage Pre-Qualification?

Mortgage pre-qualification is the first step in figuring out what you could afford. It’s usually based on basic financial information you provide, like:

Your income

Your debts

Your estimated credit score

Your down payment amount

You can often get pre-qualified online, over the phone, or by filling out a quick form with a mortgage broker or lender.

It’s a Rough Estimate

The key thing to know is that pre-qualification is not a guarantee. The lender isn’t checking your documents or pulling your credit report yet—they’re just giving you a ballpark number based on what you told them.

It’s kind of like a soft “what if” scenario: What if you make this much money and have this much debt? How much could you qualify for?

What Is a Mortgage Pre-Approval?

Pre-approval is the next step, and it’s a lot more serious.

This is where the lender or mortgage broker actually looks at your:

Verified income documents (pay stubs, job letters, taxes)

Credit report and score

Debt levels (loans, credit cards, lines of credit)

Assets (savings, RRSPs, etc.)

Identification and employment history

You’ll often need to fill out a mortgage application and consent to a credit check. If all goes well, the lender will give you a pre-approval letter showing how much you’re approved for, the estimated interest rate, and how long the approval is good for (usually 60 to 120 days).

Why It’s Important

A mortgage pre-approval tells real estate agents and sellers that you’re serious, and that you already have financing lined up—up to a certain amount. In a competitive market like Ontario, this can make or break your offer.

What’s the Main Difference?

Let’s put it this way:

Pre-qualification is a quick preview — useful for planning and budgeting.

Pre-approval is a verified promise — useful when you’re ready to shop and make offers.

Think of pre-qualification like browsing online and checking your credit card limit. Pre-approval is like getting the card, having it in your wallet, and knowing exactly what it can buy.

Why Pre-Qualification Is Still Helpful

Even though it’s not official, pre-qualification can be a helpful starting point if you:

Are early in the home-buying process

Don’t know your exact numbers yet

Want a fast idea of your price range

Need to figure out if it’s time to speak to a broker

It’s also useful for comparing your financial readiness to what you think you can afford. For example, you might assume you’re ready to buy a $700,000 home, but a quick pre-qual shows you’d probably qualify for $500,000 based on your income and debts. That kind of reality check can save you a lot of stress later.

Why Pre-Approval Matters When You’re Serious

If you’re actually getting ready to buy a home—especially in a competitive area—then pre-approval is a must.

Here’s why:

You know exactly how much a lender is willing to give you

You lock in a rate (which can protect you if rates rise)

Sellers take your offer seriously

Your home-buying process moves faster and smoother

Also, if you’re working with a mortgage broker, a pre-approval helps them shop around on your behalf and find the best rates and lenders for your situation.

What You Need for a Mortgage Pre-Approval

Pre-approvals take more work, but they’re worth it. Here’s what you’ll usually need to provide:

1. Proof of Income

This could include:

Recent pay stubs

A letter from your employer

Tax returns if you’re self-employed

2. Credit Check

The lender will pull your credit report to see:

Your credit score

How much debt you have

How you manage payments

A score of 680+ will give you access to most bank mortgage products in Canada. Lower scores may push you toward a B lender or private option.

3. Proof of Assets

You may need to show bank statements, investment accounts, or RRSP balances to prove you have the down payment and closing costs.

4. Employment Verification

Some lenders may call your employer or ask for past job history to confirm your income is stable and consistent.

5. ID and Basic Info

You’ll need government ID and details about your current living situation (renting, owning, etc.).

How Long Does a Pre-Approval Take?

Most pre-approvals take 1 to 3 business days, depending on how quickly you provide your documents and how complex your file is.

Working with a mortgage broker can speed things up because they know exactly what lenders want and how to package your file properly.

How Long Does a Pre-Approval Last?

In Canada, mortgage pre-approvals are usually valid for 60 to 120 days. During that time, your interest rate is often locked in, which gives you protection if rates rise while you’re house hunting.

If your approval expires, you may need to re-submit updated documents or go through another credit check—so it’s best to move forward while your pre-approval is still fresh.

Do Mortgage Pre-Approvals Affect Your Credit?

Yes, but only a little.

When you apply for a mortgage pre-approval, the lender or broker will run a hard credit check. This means they pull your full credit report from one of Canada’s credit bureaus (Equifax or TransUnion).

A hard credit check can lower your score by a few points—usually less than 10—and the impact is temporary.

A Few Things to Know:

One or two checks in a short period of time are normal and won’t hurt you much.

Multiple checks across many lenders over several weeks or months can add up, especially if you’re also applying for other credit (car loans, credit cards, etc.).

Most brokers will only do one credit check and use it to shop across many lenders—so working with a broker instead of applying at several banks yourself can actually help protect your score.

Common Mistakes to Avoid

Getting pre-approved is a smart step—but it only helps if you do it right. Here are some common mistakes people make with pre-approvals (and how to avoid them):

Mistake #1: Thinking Pre-Approval Means You’re Approved

Even if you're pre-approved, you're not 100% guaranteed a mortgage. The lender still needs to:

Review the property you want to buy (some properties don’t qualify)

Confirm your income and credit again before final approval

Check for changes in your situation (like new debt or a job change)

Solution: Don’t make big financial moves—like switching jobs, taking on new debt, or co-signing a loan—between getting pre-approved and closing on your home.

Mistake #2: Not Understanding Your Budget

Just because you’re approved for a $600,000 mortgage doesn’t mean you should spend it all.

A mortgage payment is only one part of the cost of owning a home. Don’t forget:

Property taxes

Heating and utilities

Condo fees (if applicable)

Maintenance and repairs

Closing costs (land transfer tax, legal fees, etc.)

Solution: Use your pre-approval as a guide, but build your own comfortable budget around your full monthly expenses.

Mistake #3: Letting Your Pre-Approval Expire

Many buyers get pre-approved, then wait too long to go house hunting. If your pre-approval expires, you'll need to go through the process again—and if your financial situation has changed or rates have gone up, you may qualify for less.

Solution: Start seriously looking for homes soon after getting pre-approved, while your rate and amount are still locked in.

Can You Get Pre-Approved If You Have Bad Credit?

Yes, it’s possible—but your options may be limited.

If your credit score is below 680:

You may not qualify with major banks (called “prime lenders”)

A mortgage broker can help you explore options with B lenders or private lenders

You might need a larger down payment or show more income documentation

Your interest rate will likely be higher, but it can still be a good step toward homeownership

A good broker will coach you on how to improve your file so you can refinance into a better mortgage later on.

Talk to a Broker Before You Start House Hunting

Before you start house hunting, it’s a smart idea to speak with a mortgage professional who can help you understand your borrowing power, walk you through your options, and flag any issues that might affect your ability to get approved later.

Whether you’re a first-time homebuyer or just exploring your options, getting advice early can save you time, money, and surprises down the road.

At 360Lending, we’ll help you:

Understand how much you can comfortably afford

Compare lenders, rates, and mortgage products

Spot common mistakes before they happen

Create a plan that fits your financial goals