Getting Pre-Approved Before You Start Touring

Pre-qualification is a quick, informal estimate based on what you tell a lender — nothing's verified, so it won't help with an offer. A rate hold locks in a rate for 90–120 days but still doesn't check your finances. A pre-approval is the real one: the lender verifies your income, job, credit, and down payment, then gives you an actual maximum purchase price plus a locked rate.

For offer purposes in Ottawa, only the pre-approval counts.

Most brokers and banks around Ottawa want the same basic package:

Lenders lean on two ratios. Gross Debt Service (GDS) compares your housing costs to your gross income and is capped around 39%. Total Debt Service (TDS) compares all your debt payments to gross income, capped around 44%.

"Housing costs" here means mortgage principal and interest, property tax, heat, and half of any condo fees.

Every number also has to pass the federal stress test: you need to qualify at whichever is higher — your contract rate plus 2%, or 5.25%.

Say your actual rate is 4.49%. The stress-test rate would be 6.49%. On a $570,000 mortgage over 25 years, the payment at 4.49% is about $3,160 a month; at 6.49% it's closer to $3,820. You have to qualify against that higher $3,820 figure, even though you'd never actually pay it.

In practice, this usually shrinks your maximum borrowing power by 15–20% compared to the rate you're actually offered.

1. Choose a broker or a bank (a broker usually serves first-time buyers better). 2. Send in your documents. 3. Your broker pulls credit and shops it to lenders. 4. A lender comes back with a maximum price and rate hold, usually within 1–3 business days. 5. You get a pre-approval letter to hand to your realtor. 6. You tour homes knowing your real budget. 7. Once you find one, the lender re-checks everything and issues a firm commitment.

A broker shops your file across banks, monolines, and credit unions at no cost to you, while a bank can only offer you its own products.

Brokers tend to matter most if you're self-employed, buying new construction with a long rate hold, have income that doesn't fit a standard mould, or want a longer 30-year amortization on an insured mortgage.

Happy to introduce you to a few brokers I work with regularly who focus on first-time buyer files.

Typically 1–3 business days after your documents are in. The rate hold itself usually runs 90–120 days, sometimes 120–150 for new construction. If you haven't bought by the time it expires, you can get pre-approved again — just at whatever rate is current then.

Mistaking a rate hold for a pre-approval. Opening new credit during the hold — even one hard inquiry can shift your file. Changing or leaving a job mid-hold. Shuffling your down payment between accounts without a paper trail. Adding a co-buyer late, since that resets the underwriting.