FAQs About Mortgage Preapproval

A mortgage preapproval is an important preliminary step for prospective first-time homebuyers. Take a closer look at what this process entails and what it could mean for your future below.

What is a mortgage preapproval?

A mortgage preapproval does not mean you can automatically get a loan for the home you want to buy. It simply means that a mortgage professional has taken a look at your financial history—your income, assets, liabilities, and credit score—and has determined how much you can realistically receive through a loan and what your interest rate will be.

Note that preapproval does not guarantee that your loan will be approved. You will still need to go through the underwriting and due diligence process after putting an offer in on a home.

Is this the same thing as prequalification?

No. Prequalification means that a mortgage professional has determined your capacity to pay based on the numbers you gave them, without going too deep into your financials.

Preapproval means that the mortgage professional has made a thorough assessment of your income, assets, and credit history.

How long does a mortgage preapproval last?    

Depending on the lender, a mortgage preapproval can last anywhere from 90 to 120 days, and gives the borrower a rate lock against rising interest rates.

If you haven't decided on a home by the end of that period, you can ask the mortgage professional to renew the preapproval. You may also be asked to update your financial information.  

When and why do I need a mortgage preapproval? 

It’s best to seek a preapproval before you even begin looking for homes. This way, you’ll know the loan amount you’re eligible for, and you can also shop around for the best mortgage rates. Alberta has a thriving real estate scene, so you can quickly find homes that are within your budget.

A preapproval shows that you’re a serious homebuyer. In a competitive housing market, this will give you the advantage over other prospective buyers who have not yet been preapproved.

How do I get preapproved for a mortgage? 

When you’re ready to work with a mortgage professional, you’ll need to submit the following to get preapproval: proof of identity and/or residency,  number of dependants, marital status, proof of employment and income over the past three years, proof of your down payment and closing costs, including the source of the funds, as well as information about your assets and debts.