How does mortgage pre-approval work and what does it guarantee in Ontario?

A mortgage pre-approval is a conditional commitment from a lender stating it will lend you up to a specified amount at a stated interest rate, for a set period — commonly 90 to 120 days. To pre-approve you, the lender reviews your income, credit history, existing debts, and the size of your down payment.

A rate hold is one of the key benefits: if rates rise during your house-hunting period, the pre-approved rate is protected. If rates fall, lenders typically give you the lower rate. The pre-approval also clarifies your maximum budget so you focus on properties you can actually afford.

What a pre-approval does not do is guarantee final funding. Once you make a purchase offer, the lender will appraise the specific property, verify your income documents more thoroughly, and confirm your situation has not changed. Any job change, new credit, or material shift in your finances since pre-approval can still result in the mortgage being declined. This is why maintaining a financing condition in your offer until final approval is confirmed is a meaningful protection. Pre-approval does not replace that condition. Speak with your mortgage broker and lawyer about what conditions to include in your offer.