Mortgage Pre-Approval: Why do the numbers keep changing?

Tracy Head • January 11, 2023

From a broker’s perspective, trying to nail down an upper price point for clients is a little like (aging myself here) the sliding puzzles that were around when I was young.


I had a conversation with a young couple recently who were frustrated with a broker they were working with. They said every time they spoke with the broker their numbers seemed to change.


I explained a bit about how we calculate our pre-qualifications / pre-approvals and told them their broker is being very thorough to make sure they don’t end up writing a price point they won’t qualify for. I showed them how their broker is doing an amazing job of making sure they are set up for success.


Sometimes it gets frustrating on both ends being as it feels like the goal posts move faster than clients can find a suitable home to write an offer on. Having a rate hold in place helps eliminate part of this uncertainty.

Each mortgage application is slightly different. 


Each lender is slightly different.


Clients may have T4 income or self-employed income, as well as other sources including things like Child Tax Income, pensions, interest or dividend income, RRIF payments, and co-borrower income.


Likewise, down payments come from different sources:


  • Savings
  • Proceeds of sale from another property
  • RRSP (First Time Home Buyer withdrawals)
  • Gifts from family
  • First Time Home Buyer’s Incentive Program
  • Borrow sources (Flex Down Mortgages)


And of course the Stress Test comes into play.


If you don’t know about the stress test, the short version is that we have to qualify your mortgage application at either your contract rate plus two per cent or the Bank of Canada Benchmark rate, whichever is higher. The contract rate means the actual rate you will be approved at.


This calculation was a lot easier when fixed rates were below 3.25 per cent as we could use the Benchmark rate of 5.25 per cent and be certain of our numbers.


Right now most lenders have 4.89 per cent (plus or minus a little) available for a five year fixed rate on an insured mortgage. So I would run your calculations at 6.89 per cent and have a rate hold in place for you to be certain of your price point.


Easy, right?


Now we move onto the lender end of things. As an example, some lenders will use the full amount of CTC income. Others will only use a percentage.


Some lenders will accept down payment from the First Time Home Buyer’s Incentive program while others won’t.


Some lenders will finance properties with wood foundations, while others won’t.


You get the picture here – the calculations that work with one lender to maximize your price point may not work with the lender that will actually finance the home you’ve written your offer on.


My best advice if you are venturing into the world of home ownership is to take your time and do your homework. One of my columns from November talks about the challenges you can face if you don’t have your ducks in a row.


In many markets we need to help you maximize your mortgage amount just to get you into the market, so it will likely be several conversations before you have an exact number nailed down. Be patient with the process and learn as much as you can before you write an offer. The time invested upfront will help to make the process a smoother one for you.

Tracy Head

Mortgage Broker

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By Tracy Head June 12, 2025
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By Tracy Head June 2, 2025
Its been a while since I wrote about the importance of your credit report. This topic popped up twice this week so I think a refresher is not a bad idea. When we submit a mortgage application lenders look carefully for a few specific things: Is the home you are looking to buy or refinance readily marketable / appeals to a wide range of potential buyers? Do you have your down payment in order? Do you have consistent income to repay your mortgage? Does your overall financial profile show you manage yourself responsibly? Does your credit report reflect a history of payments made on time and as agreed? When they are reviewing your credit report they are also looking for a few specific things. How long have you had active credit facilities (credit card/line of credit/mortgage etc)? Do you have a history of making your payments on time? Do you pay most of your credit card balances off regularly or do you run with cards maxed out all the time? Lenders fully understand that sometimes life happens and we can sometimes explain one-off blips or issues. If you have a consistent history of late payments that can become a bit more challenging to explain. One thing that I chat about with my clients is how making your credit card payment a few days ahead of your statement cutoff date can really help boost your score. Over the last few years it has become more common that people use their points cards for everything over the course of the month then pay their card in full once they get their statement. If you operate your credit card this way your credit report only picks up the balance as reported on your statement so it can look like you are always carrying a significant balance even though you always pay in full. For most people this is not a big deal, but if you are working on improving your credit score this small tweak can have a huge impact. The other issue that popped up this week was incorrect information on a client’s credit report. Part of her first name was missing and the birthdate was incorrect. The client was able to confirm everything on her credit bureau for me right down to previous addresses, employers, and old loans that had been paid off. Lenders would not move forward until her credit report was corrected and in this case because two items were wrong the client needs to correct it herself (normally we can help make changes fairly quickly). Its always a good idea to review your credit report at least once a year to make sure that all of your information is reporting correctly. If there is an issue you can catch it early and correct it before you are in a panic midway through a mortgage application. Changing topic a wee bit as my daughters are on evacuation alert already … If you are in the process of buying a home as we move into fire season please make sure you have a clause in the agreement as to what will happen should there be an active fire nearby. Nail down your home insurance as early as possible because once there is an active fire close by securing an insurance policy can be very difficult if not impossible.