Before you head out home shopping, it’s important to first determine how much you can comfortably afford to spend. Not only will getting your mortgage agent to arrange a pre-approval help you understand what lenders look for when granting you a home loan, but it will also prevent you from viewing properties that are out of your price range.


Not to be confused with a prequalification (which is an ‘estimate’ of the amount you could be given for a mortgage), a preapproval is a conditional commitment by a financial institution to grant you a specific amount of money at a certain interest rate based on your qualifications. 


The amount for which you’re preapproved is likely the maximum you’ll receive, but it’s not a guarantee that you’ll receive a mortgage loan in that amount. The final mortgage approval will depend primarily on the value of your home and the amount of your down payment. In addition, the mortgage rate you’re offered during the preapproval period is only guaranteed for a set timeframe – typically 90-120 days. And if any of your important information (see list below) changes before your mortgage is approved and closed, this could negatively impact your chances of receiving a mortgage at all. 


Here are five things you’ll be asked to provide in order to become preapproved for a mortgage:


  • Identification. Identity theft is a major issue that occurs far too often. As a result, your lender will require you to provide government-issued ID such as a driver’s licence or passport displaying your name, address and date of birth.
  • Employment verification. Your lender will want to know that you have stable employment that enables you to make your mortgage payments on time. You’ll be required to provide a letter from your employer indicating your position and the length of time you’ve been employed. And if you’re self-employed, you’ll be asked for your Notice of Assessment for the last two years. You may also be required to provide additional details such as the nature of your business, balance sheets, statement of business activity and references.  
  • Proof of income. Your lender will also want you to demonstrate that your income has been steady for at least two years. You may be required to provide income tax statements and/or paystubs. If you’ve had any significant gaps in employment or job instability, a lender may be less likely to grant you a mortgage. If you’re self-employed, expect to provide tax returns or other proof that shows history of your ability to generate sufficient income to make your mortgage payments. Proof of any additional income sources such as a salary from a second job, commissions, bonuses or investment interest is also useful.
  • Proof of assets. Anything you own that has a monetary value – and can be easily liquidated and turned into cash – is considered an asset. This includes such things as: money in your bank accounts; investments; properties; vehicles; and other valuables such as jewellery and artwork. Your lender will ask for details to determine your total asset value. 
  • Credit score. Your creditworthiness plays an important role in a lender’s decision to approve or deny your mortgage request. Your credit score is based on your credit history, which is a record of your debts and the ability to repay them. This information is contained on your credit report, which outlines any open accounts, repayment history, total debt levels and any bankruptcy or collection issues. Maintaining a healthy credit history will provide credibility and, therefore, influence your ability to obtain a loan. It’s wise to monitor your credit report on a regular basis to ensure it’s up to date and doesn’t contain errors. Your mortgage agent can offer helpful tips to boost your credit score leading up to your mortgage approval.



Of course, there are other documents you may also need to provide, but the ones listed above will give you the best idea of what to expect during the preapproval process.


Have questions about getting preapproved for a mortgage? Answers are a call or email away!