Introduction: Why Pre-Approval Comes First
If you're house hunting in Calgary without a pre-approval, you're shopping blind. You don't know your budget, sellers won't take you seriously, and you risk falling in love with a home you can't actually afford.
Pre-approval is the foundation of smart home buying. It tells you exactly how much you can borrow, locks in your interest rate for 90-120 days, and shows sellers you're a serious buyer with financing already lined up.
In Calgary's market—where competitive properties can attract multiple offers—a pre-approval letter can be the difference between your offer being accepted or ignored.
This guide walks you through the entire pre-approval process, from gathering documents to understanding what affects your approval amount.
Pre-Qualification vs Pre-Approval: Know the Difference
These terms get used interchangeably, but they're not the same thing.
Pre-qualification is a rough estimate based on information you provide. No verification, no credit check, no commitment from the lender. It takes 10 minutes and tells you approximately what you might qualify for. It's a starting point, nothing more.
Pre-approval is the real deal. The lender verifies your income, pulls your credit, analyzes your debts, and issues a formal commitment (subject to conditions). It's based on actual documentation and includes a rate hold.
When you're competing for a home in Calgary, only a pre-approval matters. Sellers and their agents know the difference.
Step 1: Gather Your Documents
Pre-approval requires proof of everything you claim about your financial situation. Here's exactly what you need:
Identification
- Government-issued photo ID (driver's license or passport)
- Proof of Canadian residency or work permit status
Income Verification (Employed)
- Most recent pay stub showing year-to-date earnings
- T4 slips from the past 2 years
- Notice of Assessment (NOA) from CRA for past 2 years
- Letter of employment confirming position, salary, and start date
Income Verification (Self-Employed)
- Personal tax returns (T1 General) for past 2 years
- Notice of Assessment for past 2 years
- Business financial statements or T2 returns
- Year-to-date profit/loss statement if mid-year
Need help navigating self-employed income verification? Check out our self-employed mortgages service.
Down Payment Verification
- 90 days of bank statements showing down payment funds
- Gift letter if receiving gifted down payment from family
- Explanation of any large deposits (to verify funds aren't borrowed)
Assets and Debts
- Recent statements for all bank accounts, RRSPs, TFSAs
- Statements for all debts: credit cards, car loans, student loans, lines of credit
- Property tax statements if you own other real estate
- Condo fee statements if applicable
The more complete your documentation, the faster the process. Missing paperwork is the #1 cause of delays.
Step 2: Choose Your Broker or Lender
You have two paths: go directly to a bank, or work with a mortgage broker.
Going directly to a bank means you see only their products and rates. You're limited to what that one institution offers.
Working with a broker gives you access to 60+ lenders—banks, credit unions, monoline lenders, and alternative lenders. We compare rates and terms across the market and find the best fit for your situation.
Brokers get paid by the lender, not you. There's no cost to use a broker, and you often get better rates because of our lender relationships and volume.
For first-time buyers navigating this process for the first time, a broker can explain options, anticipate issues, and guide you through each step. Learn more about how we help first-time buyers in Calgary.
Step 3: Application and Credit Check
Once you submit your application with documentation, your broker or lender will:
- Pull your credit report from Equifax and TransUnion
- Review your credit history for payment patterns, collections, bankruptcies
- Analyze your credit score to determine risk and pricing
The credit check is a "hard inquiry" that will temporarily drop your score by a few points. Multiple mortgage inquiries within a 14-45 day window count as a single inquiry, so rate shopping won't hurt you.
Lenders look at more than just your score. They review:
- Payment history on current debts
- Credit utilization (how much of your available credit you're using)
- Length of credit history
- Types of credit (mix of credit cards, loans, mortgages)
- Recent credit applications
If you have bruised credit or past issues, a broker can navigate which lenders are more flexible and position your application strategically.
Step 4: Income and Debt Analysis
This is where lenders determine how much you can actually borrow.
They calculate two key ratios:
Gross Debt Service (GDS) Ratio
Your housing costs (mortgage payment, property tax, heating, 50% of condo fees) divided by your gross monthly income.
Maximum allowed: 39% for most insured mortgages
Total Debt Service (TDS) Ratio
Your housing costs PLUS all other debt payments (car loans, credit cards, student loans, lines of credit) divided by your gross monthly income.
Maximum allowed: 44% for most insured mortgages
If your down payment is less than 20%, you'll need mortgage default insurance (CMHC, Sagen, or Canada Guaranty), which adds to your payment but allows you to enter the market with as little as 5% down.
The Stress Test
Here's the catch: you must qualify at the higher of your contract rate plus 2%, or 5.25%. This ensures you can still afford payments if rates rise.
The stress test is the main reason many buyers qualify for less than they expected. It's also why understanding your numbers before you start shopping is critical.
Want to see your numbers? Try our affordability calculator to get a realistic budget based on current stress test rules.
Step 5: Your Pre-Approval Letter
If you meet the lender's criteria, you'll receive a pre-approval letter stating:
- Maximum mortgage amount you're approved for
- Interest rate and rate hold period (typically 90-120 days)
- Conditions that must be met before final approval
- Down payment verified
- Approval expiry date
The letter is your bargaining power. When you write an offer, include it to show sellers you're financially qualified.
Rate Hold
The rate hold is a huge advantage. If rates drop during your hold period, you get the lower rate. If rates rise, you're protected at your pre-approved rate.
Most rate holds last 90-120 days, giving you time to find the right property without rushing.
Conditions
Common conditions on pre-approval:
- Acceptable property appraisal
- Clear title search
- Property insurance arranged
- No material changes to your financial situation
- Employment verification at closing
Pre-approval is not final approval. It's a commitment based on current information, subject to verification and property specifics.
How Long Does Pre-Approval Take?
With a mortgage broker: 24-48 hours once documents are submitted
With a bank: 3-7 days, sometimes longer depending on their workload
Speed matters in Calgary's market. If you're ready to make an offer on a competitive property, waiting a week for pre-approval can mean losing the home.
Working with a broker who has established lender relationships often means faster turnaround, especially if there are unique aspects to your application.
What Can Affect Your Pre-Approval Amount
Several factors influence how much you'll be approved for:
Credit Score
Higher scores unlock better rates and larger approval amounts. A score of 680+ qualifies you for A-lender rates. Below 650, you may need alternative lenders with higher rates and fees. See our guide on credit score requirements for details.
Existing Debts
Every dollar in monthly debt payments reduces your borrowing power. Paying off or paying down debts before applying can significantly increase your approval amount.
Income Stability
Salaried employees with steady work history are lower risk. Self-employed, commissioned, or variable income applicants may need to prove longer income history or provide additional documentation.
Down Payment Source
Down payment must be from legitimate sources: savings, sale of assets, RRSP Home Buyers' Plan, or documented gifts from immediate family. Borrowed down payments are not allowed.
Property Type
Some lenders have lower maximums for condos, rural properties, or non-standard properties. If you're eyeing a unique property type, mention it during pre-approval.
Common Pre-Approval Mistakes to Avoid
These mistakes derail pre-approvals or reduce approval amounts:
Shopping too early: Pre-approval expires in 90-120 days. Don't get pre-approved 6 months before you're ready to buy.
Making large purchases during the process: Buying a car, financing furniture, or opening new credit cards changes your debt ratios and can invalidate your pre-approval.
Changing jobs: Lenders verify employment before closing. Changing jobs—especially to self-employment or a different industry—can jeopardize approval.
Large unexplained deposits: Lenders review your bank statements. If there's a sudden $10,000 deposit, you'll need to prove it's not borrowed funds (which would increase your debt load).
Ignoring credit during the process: Late payments, collections, or maxed-out credit cards during your pre-approval period can change your approval status.
Once you're pre-approved, maintain status quo until closing. Don't make major financial changes without consulting your broker first.
Pre-Approval FAQs
Does pre-approval guarantee final approval? No. Pre-approval is based on your current financial situation and subject to property specifics (appraisal, title, insurance). It's a strong commitment, but not final until conditions are cleared.
Does pre-approval hurt my credit score? The hard credit inquiry will temporarily drop your score by a few points, but the impact is minimal and short-lived. Multiple mortgage inquiries within 14-45 days count as one inquiry.
How long is pre-approval valid? Typically 90-120 days, depending on the lender. Rate holds usually match the approval period. You can renew if needed, but lenders may re-verify your information.
Can my pre-approval amount change? Yes. If your financial situation changes (new debt, job loss, income reduction), your approval amount can decrease or be revoked. Property-related issues (low appraisal, title problems) can also affect final approval.
Do I have to use the lender who pre-approved me? No. Pre-approval is not binding. If rates drop or you find better terms elsewhere, you can switch lenders. However, your rate hold protects you only with the original lender.
Bottom Line
Pre-approval is not optional if you're serious about buying a home in Calgary. It defines your budget, protects your rate, and shows sellers you're a qualified buyer.
The process takes 1-2 days with the right documentation and a broker who knows how to position your application. Don't wait until you've found your dream home to start—get pre-approved first so you're ready to act when the right property hits the market.
Need help getting pre-approved in Calgary? I work with buyers across all credit profiles—from first-time buyers to self-employed professionals to those with bruised credit. Let's find out what you qualify for and build a plan to get you into your home.
