Mortgage pre-approval basics in Ontario: what it does and does not do

At a glance: a lender’s maximum and a comfortable budget are different numbers. Know the minimum down payment for your price, expect to qualify at the higher stress-test rate, and keep a financing condition until the lender approves the specific property.

Start with a comfortable payment, then borrowing capacity

Before shopping, add up the mortgage payment, property tax, utilities, insurance, maintenance and condo fees where they apply. Leave room for normal spending and a reserve. That turns “what can I borrow?” into “what can I comfortably carry?”

Prequalification, pre-approval and final approval are different

A quick online estimate is not a lender reviewing your documents. Ask your lender what was actually checked, what conditions remain, and when any rate hold expires.

Even a pre-approval does not guarantee a mortgage for a particular home. The property, the appraisal and your file at the time of purchase still need approval.

Minimum down payment by price

Purchase price	Minimum down payment (FCAC)
$500,000 or less	5% of the price
$500,000 to $1.5 million	5% of the first $500,000 plus 10% of the portion above
$1.5 million or more	20% of the price

Example: the minimum on a $900,000 purchase is $25,000 + $40,000 = $65,000. Closing costs, land transfer tax and a reserve are on top of that. With less than 20% down, mortgage default insurance applies and its premium changes the total borrowed.

The stress test

Federally regulated lenders must qualify you at the higher of 5.25% or your contract rate plus 2%. Your actual payment is calculated at the contract rate; the stress test only decides whether you qualify.

Prepare the file your lender asks for

• Proof of income suited to your employment (pay stubs, T4s, or two years of Notices of Assessment if self-employed)
• Down payment history, including any gift letter
• Debts and monthly obligations
• If your down payment depends on selling a home, say so early

Until closing, ask your lender before taking on new debt or changing jobs.

Read next: Buying your first GTA home in fall 2026

Educational information only, not mortgage advice or approval. Confirm financing with your lender or a licensed mortgage professional. Inderpal Sidhu, Salesperson · HomeLife Silvercity Realty Inc., Brokerage.

Speak with Inderpal Sidhu
Direct: (647) 338-6875 · Office: (647) 931-5918
WhatsApp · Plan my home search
Inderpal Sidhu, Salesperson · HomeLife Silvercity Realty Inc., Brokerage. Not intended to solicit properties or clients already under contract with another brokerage.