Mortgage Pre-approval versus Mortgage Pre-Qualification.

When considering purchasing a house or condo in the Greater Toronto Area (GTA), one of the most important steps in the home-buying process is being pre-approved for a mortgage. Many buyers apply for a mortgage and receive approval from a lender BEFORE searching for a home. This is called “pre-approval.”

Why is pre-approval important at the beginning of the home-buying process?

  • Pre-approval can cut days or even weeks off the conditional period negotiated in the Agreement of Purchase and Sale because the lender has already conducted its credit analysis and approved you for a mortgage.
  • Pre-approval strengthens your offer and negotiating position. A home seller will often choose to accept an offer from a buyer who is pre-approved for a mortgage over one whose financial picture is still in question. Especially in a low inventory market when there is fierce competition between buyers.
  • Pre-approval will determine your price range and narrow your search parameters. Based on your down payment and that pre-approved mortgage amount, you will know how much you can afford before you even start looking for a house.

There is also a significant difference between buyers who are merely “pre-qualified” and those who are pre-approved.

Pre-qualified buyers are those whose lenders have determined how much they can borrow based only on information the buyer has provided to the lender. Nothing has been verified to determine the buyer's true creditworthiness. The buyer still must fill out a loan application and go through the lender's approval process.


For buyers who have been pre-approved, the lender has already done a credit check along with verification of employment and deposit. The lender's pre-approval is a commitment to loan the buyer up to a certain predetermined amount. The only piece missing is the lender’s appraisal of the home to confirm its value.


If you are considering a move in the next 30-90 days, getting pre-approved is the most essential preparation you can do.

Start Here to get more information or get the process started.