Unless you’re among the rare and independently wealthy, you’ll likely need a mortgage to buy a home. That’s simply how most purchases work.

If you’re a buyer just starting out, getting a mortgage pre-approval before making offers is essential. It helps you understand your real budget and reduces the risk of surprises later. The questions most buyers have are where to go and what the process actually looks like.

Where Mortgages Come From

Most buyers start by thinking about their bank. Sometimes that does lead to a solid option. That said, many buyers benefit from working with a mortgage broker.

A broker can shop across multiple lenders, including major banks and alternative lenders, to find a product that fits your situation. That flexibility matters more than most people realize.

A-Lenders

Canada’s “Big 5” banks [TD, RBC, CIBC, Scotia, BMO] are considered “A-lenders.”  They are federally regulated and lend to borrowers with strong credit and consistent income. Applicants must pass the federal stress test to qualify.

Some credit unions also fall into this category. While they are provincially regulated, their lending standards are often just as strict.

Monoline lenders are another type of A-lender. These companies focus exclusively on mortgages and usually work through brokers rather than directly with consumers. Because they have lower overhead, they often offer very competitive rates and clean, straightforward products.

A-lenders have the most detailed application process and the highest qualification standards. In return, they offer the lowest interest rates. They are also the only option for buyers with less than 20 percent down.

B-Lenders

B-lenders are a common and legitimate alternative for buyers who do not quite fit A-lender guidelines. Lenders such as Home Trust and Equitable Bank fall into this category.

They are regulated, well-established, and widely used. Many self-employed buyers qualify through B-lenders because these lenders are more flexible in how income is assessed.

They may also work with buyers who are newer to Canada or rebuilding credit. A minimum 20 percent down payment is usually required, and interest rates are typically a bit higher than A-lender rates.

Private Lenders

Private mortgages are usually a last resort.

Unless the loan comes from a trusted family member, private financing is expensive. Rates are high, and upfront fees are common. These fees are often 2 to 4 percent of the loan amount, paid at the start. On a $500,000 mortgage, that can mean $10,000 to $20,000 in fees before you even make a payment.

Private mortgages are usually short-term, often six to twelve months, and payments may be interest-only. They are typically used as a temporary solution while a borrower improves their situation.

This sector is largely unregulated, so having your lawyer review the contract before signing is critical.

Even within the same category of lenders, you will find multiple mortgage products and different interest rates.

High-ratio vs Conventional

There are two basic mortgage structures.

• A conventional mortgage is uninsured. You provide at least 20 percent down and borrow no more than 80 percent of the home’s value.
• A high-ratio mortgage is insured through providers such as CMHC, Sagen, or Canada Guaranty. Insurance adds cost, but it allows buyers to purchase with less than 20 percent down.

When mortgage insurance is required, both the lender and the insurer must approve the deal. Each insurer has its own qualification rules. 

What You Need Before Applying

Mortgage applications are document-heavy. Being organized makes the process far less stressful. Most lenders will ask for:

• Recent pay stubs and an employment letter
• Notices of Assessment and two or three years of tax returns if you’re self-employed
• Proof of down payment and closing funds (bank statements)
• A list of assets (savings, RSP’s, cars, boats, other real estate, etc)
• Details of current debts (credit cards, lines of credit, personal loans, student debt, etc)
• Support obligations, if applicable
• Lease or Rental agreements, if applicable
• Government-issued ID

If your application meets guidelines, the lender issues a conditional commitment. Read it carefully. It outlines exactly what must remain true for the financing to hold, which matters a lot if you are making a firm offer.

A very important note about timing

From the moment you apply until the day you close, your financial picture needs to stay essentially unchanged.

That means:

• Do not take on new debt, including car loans, leases, or new credit cards

• Avoid increasing balances on existing credit cards or lines of credit

• Do not co-sign for anyone else, even temporarily

• Avoid changes to employment, income structure, or hours without speaking to your broker first

Lenders can and do recheck credit and employment before closing. Even small changes can affect your approval or reduce the amount you’re able to borrow. When in doubt, pause and ask before making any financial moves.  If you think your job situation may be different at closing, inquire of the lender during the application process whether they will guarantee the approval.

Am I Finished Once I’m Approved?

Not quite.

Mortgage approval has two parts:

1. You as a borrower

2. The property itself

The lender also evaluates the home. An appraisal is often required, and this can affect your down payment.

For example, you might be approved to borrow $500,000. That assumes the home supports a value of at least $625,000 on a conventional mortgage. If you pay more than the appraised value, the gap usually has to come from your down payment.

Certain property issues, such as insurance problems, can also affect funding.

Talking through these risks with your mortgage broker before making offers helps avoid unpleasant surprises.

“Talk to your mortgage broker to find out what you need to know about the mortgage approval process before putting in offers. This is the best way to protect yourself from ugly surprises when it comes to financing.”

What Sellers Should Know Before Accepting an Offer

Price matters, but financing strength matters too.

The highest offer isn’t always the safest offer. Even a firm offer can fall apart if the buyer’s financing is fragile.

Key questions your real estate agent should understand include:

• Is the buyer fully pre-approved?

• How much down payment do they have?

• Is there family support if needed?

• Do they need to sell another property first?

Knowing who is behind each offer helps you choose the one most likely to close smoothly. That clarity is usually appreciated most on closing day.

In Summary

Mortgage approval can feel complicated, but it doesn’t have to be intimidating. Most of the stress comes from not knowing where the real pressure points are, or assuming everything is locked in once a pre-approval is issued.

Understanding how lenders look at you, how they look at the property, and how easily things can change between offer and closing puts you in a much stronger position. It helps you plan realistically, write offers with confidence, and avoid the kind of last-minute surprises that turn exciting purchases into stressful ones.

Whether you’re buying your first home or your fifth, the goal is the same. Clear expectations, solid financing, and a transaction that actually closes the way everyone hoped it would.