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Home / Difference Between Pre-Qualified vs Pre-Approval

Pre-Qualified? Pre-Approval? Live Approval?

What is the difference and how do you ensure you have taken the right steps before you put in an offer to buy a home?

Pre-qualification: This is a general assessment. When you are looking for pre-planning advice and want to get an idea of the next steps you need to take to be able to buy a home

Minimal income or down payment documents will be collected at this point, credit likely hasn’t been pulled, and a general purchase price range is provided in order to help you plan for the future

Pre-approval: full assessment before you actively head out shopping for your new home

You will be asked to provided full documents to your broker
Income confirmation (like paystubs, T4s, tax returns), Down Payment confirmation (like bank or investment statements or confirmation of sale of an asset or amount of a family gift), etc
Your credit file is pulled for a formal pre-approval unless otherwise discussed?
KEY: This is NOT CMHC approved yet. That doesn’t come until you have a live offer in on a home. You have a lender/broker reviewed file at this point and possibly a rate hold put in place (if applicable)
The file has been reviewed fully based on lender/insurer affordability rules.

This is when we get a formal stamp of approval from the chosen lenders and insurers based on not just your credit, income and down payment but also the property you have picked to purchase.

When the commitment/approval comes, it is ALWAYS conditional. This doesn’t mean we are 100% done! The lenders will review the documents you provided to us and sign off on them/request anything further they require.
Approvals are based on info provided in our submitted application - something to keep in mind is an Approval CAN ALWAYS be cancelled if documents don’t match the info that was provided.
Documents must be supplied, reviewed AND approved by lenders before the removal of finance condition is completed, to ensure that there are no follow up docs requested that cannot be sourced ***this is key***
This is why a pre-approval and document collection prior to you finding your home is so important. It limits any unforeseen circumstances or problems with your home purchase. We don’t ever like surprises!!