Getting Pre-Approved

When you are pre-approved for a mortgage, it means a lender has looked closely at both your credit report and your income and determined that you qualify for a mortgage. The lender will tell you the maximum amount of loan it will make, which loan programs you qualify for, and will discuss the interest rates it will offer for different types of mortgages.

If you are considering buying a home with less than 25% down payment - your mortgage application is required by law to be insured by the Canadian Mortgage and Housing Corporation or Genworth Financial Canada. Mortgage insurance makes it possible for you to purchase a home using a lower down payment. Since it protects lenders and investors against loss if the mortgage loan is not repaid, it allows the lender to approve your mortgage with as little as a 5% down payment.

Once you're pre-approved you can go shopping for a home with confidence about your buying power. To a Seller, a pre-approval identifies you as a serious buyer. Being a pre-approved buyer may also give you some leverage when negotiating for price with the Seller. It may also make your offer more appealing over competing offers from other buyers who are not pre-approved.