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Part of my job as an Ottawa mortgage broker is to educate people on the mortgage process and how they can make it go more smoothly. One area we see a lot of confusion with is between pre-qualification and pre-approval. While both have some similarities, such as showing sellers that they are serious about buying a home, they still have some major differences. Let’s take a look at what is similar, different, and which is better.


With both the pre-qualification and pre-approval, you get an estimate of how much you qualify to borrow for your mortgage. They both help to narrow down your search list to homes that you can reasonably afford. To sellers and real estate agents, they both show that you are committed to buying a home, and shows them that your chances of being approved for that amount are very good. That’s pretty much where the similarities end though.


The confusion comes in when lenders use these two terms interchangeably. The problem is, one gives you a much stronger foothold than the other, and here’s why:


To get a pre-qualification a lender will do a brief review of all of your financial details. This is how they determine the maximum amount of money they are willing to lend you, based on your affordability. They will check your credit score, debts, income, and assets. However, they don’t do any in-depth research for a pre-qualification, and there are some situations where they don’t even check your credit score. So your interest rate given for a pre-qualification is just a roundabout guess.

The issue here is that you could take a pre-qualification, start the mortgage process, and then, once the actual research starts, find that you don’t qualify for the amount or rates given. It can mean losing out on the home you made an offer on at the last minute. In some cases, a seller or real estate agent won’t accept a pre-qualification.


With a pre-approval, lenders do a more in-depth review of your finances. You will be required to provide documentation proving your employment, income, debts, and assets. They also run risk analysis and do other checks. This is why a pre-approval holds more weight than a pre-qualification. Sellers and real estate agents take it more seriously. Once you get that pre-approval, you are given a document that shows you have qualified for, and been approved for a specific amount gives a more accurate rate of interest.

Another difference between a pre-qualification and pre-approval is that with a pre-approval you have certain conditions and requirements that will need to be met at the time of closing. These are set out by the lender. For example, one condition may be that there is no major change in your credit report from the time the pre-approval is done to the time of closing. Some people make the mistake of making major changes, such as changing jobs or taking out a new line of credit before the mortgage process is done. This can cause them to not get the original pre-approval because they didn’t meet the conditions any longer.

If you are looking to get a pre-approval letter or want to know more about the process, give our Ottawa mortgage broker team a call today at (613) 440-0134!

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