Mortgage Pre-Approval in Quebec: How to Get One and Why It Comes Before House Hunting

Why start with a pre-approval

Before you visit a single property, get pre-approved for a mortgage. It tells you how much a lender will lend you, at what rate and on what terms. Without it, you risk falling for a home that is out of reach, or missing a great opportunity because your financing takes too long to confirm.

In markets where good listings move fast, like downtown Montréal, Griffintown or Brossard, a pre-approval also makes your offer more credible to the seller. It shows you are a serious buyer who is ready to act.

Pre-qualification vs. pre-approval

A pre-qualification is a quick estimate, often done online, based on what you report. It gives you a ballpark figure, but nothing is verified.

A pre-approval is based on your actual documents and credit report. The lender confirms a maximum amount and, in most cases, holds a rate for a set period. That is the one that matters when it is time to make an offer.

Documents to gather

To speed things up, have these ready before meeting your bank or mortgage broker: photo ID; your two most recent pay stubs and a recent employment letter; your notices of assessment for the last two years, especially if you are self-employed or earn commissions; account statements showing where your down payment came from over the last 90 days; and a list of your debts (car loan, credit cards, line of credit, support payments).

If part of your down payment is a family gift, you will need a signed gift letter. If you are using your RRSP (Home Buyers' Plan) or FHSA, bring up-to-date statements.

How much can you borrow?

Lenders mostly look at two ratios. The first compares your housing costs (mortgage payment, property taxes, heating and part of any condo fees) to your gross income; the usual ceiling is about 39%. The second adds all your other debts; the usual ceiling is about 44%.

You also have to pass the stress test: your ability to pay is measured at a higher rate than the one you will actually get — your contract rate plus 2%, or a regulatory floor rate if that is higher. That is why you may be approved for less than you expected.

Minimum down payment and CMHC insurance

In Canada, the minimum down payment is 5% on the first $500,000 of the price, then 10% on the portion between $500,000 and $1,500,000. At $1,500,000 and above, you need at least 20%. For a $650,000 condo, for example, the minimum is $25,000 + $15,000, or $40,000.

With less than 20% down, the mortgage must be insured (CMHC, Sagen or Canada Guaranty). The premium, from 2.8% to 4% of the loan depending on your down payment, is added to your mortgage. In Quebec, however, the QST on that premium is paid in cash at the notary. First-time buyers can now amortize an insured mortgage over 30 years, which lowers the monthly payment.

You can run the numbers yourself: every for-sale listing on our site includes a mortgage calculator that applies these rules.

How long it lasts, and pitfalls to avoid

A pre-approval usually holds your rate for 90 to 120 days. If rates drop in the meantime, most lenders give you the better of the two; if they rise, you are protected.

Keep in mind that a pre-approval is not final approval. The lender will verify everything again once your offer is accepted, including the property itself. Until then, avoid changing jobs, financing a car, opening a new credit card or moving your down payment around without talking to your advisor first. A single change can lower the approved amount.

Next step: time to act

With your pre-approval in hand, you know exactly which price range to target. Our brokers in Montréal and Brossard can then show you properties that fit your budget, estimate your closing costs (welcome tax, notary, inspection, adjustments) and prepare a strong offer as soon as the right opportunity comes along.