Understanding Mortgage Pre-Approval: A Complete Guide

Published February 8, 2026 • 9 min read • By Mortgage Wave Team

If you're thinking about buying a home in Ontario, mortgage pre-approval should be your very first step — even before you start browsing listings or attending open houses. Pre-approval gives you a clear picture of what you can afford, locks in your interest rate, and makes you a more competitive buyer. Here's everything you need to know.

What Is Mortgage Pre-Approval?

Mortgage pre-approval is a formal process where a lender reviews your financial situation — income, debts, credit score, and down payment — and tells you the maximum mortgage amount you qualify for, along with a guaranteed interest rate that's typically held for 90-120 days.

It's important to understand what pre-approval is not:

• It's not a final mortgage approval (that comes after you find a property)
• It's not a commitment to borrow (you can still shop around)
• It's not a guarantee you'll get the mortgage (the property still needs to be appraised and your financial situation can't change significantly)

Pre-Qualification vs. Pre-Approval: What's the Difference?

These terms are often used interchangeably, but they're quite different:

Feature	Pre-Qualification	Pre-Approval
Credit Check	No (or soft check only)	Yes (full credit check)
Income Verification	Self-reported	Documented and verified
Rate Hold	No	Yes (90-120 days)
Strength	Rough estimate	Solid commitment from lender
Time Required	Minutes	24-48 hours
Value to Sellers	Low	High — shows you're serious

Pre-qualification is a quick back-of-napkin estimate. Pre-approval is the real deal. Always aim for full pre-approval before house hunting.

Why Pre-Approval Matters

1. Know Your Budget

Pre-approval tells you exactly how much you can borrow. This prevents two painful scenarios: falling in love with a home you can't afford, or underestimating your buying power and missing out on better options.

2. Lock In Your Rate

Pre-approval holds your interest rate for 90-120 days. If rates increase during that time, you're protected. If rates decrease, most brokers can get you the lower rate. It's a win-win.

3. Strengthen Your Offer

In a competitive market, sellers prefer buyers with pre-approval. It shows you're financially qualified and serious. Some sellers won't even consider offers without pre-approval.

4. Speed Up the Process

When you find your home and make an offer, having pre-approval means the mortgage process moves much faster. Most of the paperwork is already done.

5. Identify Issues Early

Pre-approval can uncover potential problems — credit issues, income verification challenges, or debt ratio concerns — before you're under the pressure of a conditional offer deadline.

Documents You'll Need for Pre-Approval

Gather these documents before starting the pre-approval process to speed things up:

For Employed Borrowers:

• Government-issued photo ID (driver's licence or passport)
• Most recent pay stubs (2-3 pay periods)
• Employment letter confirming position, salary, and start date
• T4 slips (last 2 years)
• Notice of Assessment (last 2 years) from CRA
• Bank statements (last 3 months) showing down payment savings
• List of current debts (credit cards, loans, car payments)

For Self-Employed Borrowers:

• All of the above, plus:
• T1 General tax returns (last 2 years)
• Financial statements for your business
• Business licence or Articles of Incorporation
• Proof of HST/GST remittance (if applicable)

Additional Documents (if applicable):

• Separation or divorce agreement
• Proof of other income (rental, investments, child support)
• Gift letter (if family is contributing to down payment)
• Current mortgage statement (if you own other properties)

The Pre-Approval Process: Step by Step

Step 1: Contact Mortgage Wave

Reach out by phone, email, or through our contact form. We'll schedule a brief consultation to understand your goals and timeline.

Step 2: Submit Your Documents

Share the documents listed above. We can accept them electronically — you don't need to visit an office.

Step 3: Credit Check & Analysis

We pull your credit report (one check for mortgage purposes has minimal impact on your score) and analyze your full financial picture.

Step 4: Lender Shopping

We compare your profile against 50+ lenders to find the best rate and terms for your situation. Different lenders have different qualifying criteria — we know which ones are the best fit for you.

Step 5: Pre-Approval Issued

You receive your pre-approval, including your maximum mortgage amount and locked-in rate. At Mortgage Wave, we typically complete this process within 24 hours.

How Long Does Pre-Approval Last?

Most pre-approvals are valid for 90-120 days. If your pre-approval expires before you find a home, we can renew it — though the rate may change based on current market conditions.

If you're not planning to buy for several months, we still recommend getting pre-approved. It gives you a realistic budget to work with, and if rates start rising, you'll be glad you locked in early.

The Mortgage Stress Test

All Canadian mortgage applicants must pass the mortgage stress test, regardless of down payment size. You must qualify at the higher of:

• Your actual mortgage rate + 2%, OR
• 5.25% (the benchmark qualifying rate)

For example, if your actual rate is 3.84%, you'd need to qualify at 5.84%. This reduces the amount you can borrow compared to what your payments at the actual rate would suggest. The stress test is designed to ensure you can handle potential rate increases at renewal.

Common Pre-Approval Mistakes to Avoid

1. Changing jobs during the process — Lenders want stable employment. Switching jobs can complicate or delay your approval
2. Making large purchases — Buying a car or furniture on credit changes your debt ratios and could kill your approval
3. Opening or closing credit accounts — Don't apply for new credit cards or close existing ones
4. Moving money around — Large deposits or transfers can raise red flags. Keep your finances consistent
5. Cosigning for someone else — This adds their debt to your profile
6. Only getting pre-qualified — Make sure you get full pre-approval, not just a pre-qualification estimate

Pre-Approval Doesn't Cost You Anything

At Mortgage Wave, getting pre-approved is completely free. There's no obligation, no pressure, and no cost. We're here to help you understand your options and make the best decision for your financial future.