Picture a household earning $110,000 a year, with $400 in monthly debts and a $60,000 down payment. A lender might pre-approve about $441,794. That supports a home up to roughly $488,510, with a payment near $2,567 a month at 4.99%. Type your own numbers above for a first estimate.
What a pre-approval is
It is a lender’s written estimate of how much it will lend you, drawn from your income, debts, credit and down payment. The rate is held for a set period as well, often 90 to 120 days. It isn’t a final approval. The lender still reviews whichever home you choose.
How this estimate works
The calculator applies the tests lenders use. Housing costs must stay under 39% of gross income and all debts under 44%, both measured at the stress test rate. Whichever gives the lower payment sets your limit. From there the tool works back to a loan amount, then adds your down payment to arrive at a price.
What lenders check, and the documents to gather
Expect to show proof of income: pay stubs, a letter of employment or tax documents. Lenders pull your credit report and ask where the down payment came from. Self-employed borrowers usually need two years of tax returns.
- Your last two years of tax assessments
- Recent pay stubs and a letter of employment
- 90 days of bank statements showing your down payment
- Photo ID
Having this file ready speeds up the approval and avoids delays.
Checking the two limits by hand
Take the $110,000 example. Monthly gross income is $9,166.67. Housing may take 39% of that, or $3,575.00. All debts may take 44%, which is $4,033.33, and after the $400 in debts that leaves $3,633.33. Since the housing cap is lower, it sets the ceiling. Property tax and heat come out of that figure before the mortgage payment itself is left.
Why the amount can differ
Weak credit or irregular income can lower what a lender offers. Different ratios can raise it. Property tax and heating costs shift the limit too, so use realistic figures. Treat the result as a starting point.
Getting a pre-approval
Apply through a bank or a mortgage broker. Brokers can compare several lenders at once, and in most cases one application means one credit check. They are usually paid by the lender, so their advice costs you nothing directly, but ask how they are paid and which lenders they use. Avoid new credit applications in the weeks before and after you apply, since they can change your score.
What a rate hold does
If rates rise while you shop, you keep your locked rate. If they fall, many lenders will give you the lower one, so ask about that. Know the expiry date and what happens if you extend it.
Common surprises
A job change, a new loan or a drop in your credit score can cancel a pre-approval before you buy. Keep your finances steady until the mortgage funds. And the approved amount is a ceiling. You don’t have to spend it, and a smaller mortgage is easier to carry.
Keep planning
See the effect of your debts in the mortgage affordability calculator. Test the qualifying rate with the stress test calculator, and check the minimum with the down payment calculator.
Frequently asked questions
What is a mortgage pre-approval?
A lender's written estimate of how much it will lend you, with a rate held for a set time.
How long does a pre-approval last?
Often 90 to 120 days.
Does a pre-approval guarantee a mortgage?
No. The lender still reviews the home and your final documents.
What documents do I need?
Proof of income, ID and details of your debts and down payment.
Does it affect my credit score?
A lender checks your credit, which can cause a small dip. Avoid other new credit meanwhile.
Is this the same as a lender's approval?
No. This is an estimate. Only a lender can approve you.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.