A pre-approval tells you exactly what you can afford, strengthens your offer, and prevents wasted time looking at homes outside your budget.

Here’s how it actually works.

What Is a Mortgage Pre-Approval?

A mortgage pre-approval is a lender reviewing your finances and confirming:

• How much they’re willing to lend you
• What your interest rate could be
• What your estimated monthly payment looks like

It’s not a full approval, but it puts you in a strong, credible position as a buyer.

Step 1: Know Your Numbers

Before talking to a lender, understand your financial position:

• Income (salary, bonuses, self-employment)
• Monthly debts (car loans, credit cards, student loans)
• Down payment available
• Credit score

In Canada, lenders use two key ratios:

• Gross Debt Service (GDS) – housing costs vs income
• Total Debt Service (TDS) – total debts vs income

If these are too high, your approval amount drops.

Step 2: Gather Your Documents

Be prepared — lenders don’t guess, they verify.

You’ll typically need:

• Letter of employment
• Recent pay stubs
• T4s (last 1–2 years)
• Notice of Assessment (CRA)
• Bank statements (proof of down payment)
• ID

If you’re self-employed, expect to provide more documentation.

Step 3: Choose a Lender or Mortgage Broker

You have two main options:

Bank:

• Straightforward if your finances are simple
• Limited to their own products

Mortgage Broker:

• Shops multiple lenders for you
• Often better for complex situations or best rates

Most buyers in Ontario use a broker — it gives you more options.

Step 4: Get Your Credit Checked

Your credit score plays a major role in:

• Approval amount
• Interest rate
• Mortgage options

In Canada, a score of 680+ is generally considered strong.

Avoid:

• Taking on new debt
• Missing payments
• Large purchases before closing

Step 5: Get Pre-Approved

Once everything is reviewed, your lender will issue a pre-approval that includes:

• Maximum purchase price
• Locked-in interest rate (usually 60–120 days)
• Estimated payment

This is what you bring to the table when making an offer.

What Most Buyers Get Wrong

• They shop before getting approved → leads to disappointment
• They max out their budget → leaves no room for real life
• They assume pre-approval = guaranteed financing → it’s not

Your approval still depends on the property, appraisal, and final underwriting.

Why Pre-Approval Matters in Ontario

In competitive markets like London and surrounding areas:

• Sellers take you more seriously
• You can move quickly on the right property
• Your offer is stronger — especially against financing conditions

Without it, you’re guessing.

Final Thought

Getting pre-approved isn’t complicated — but it’s critical.

It gives you clarity, confidence, and leverage.

If you’re even thinking about buying, do this first. Everything else comes after.