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 2, 2025
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By Tracy Head May 19, 2025
I know this is a dumb question but ….  I should probably know this already …. I’m sorry to ask so many questions but …. So many times clients start out with one of these statements. They feel like they should have a better understanding of the mortgage process or terminology. The truth is that buying a home is not a simple journey. Applying for a mortgage is not a cake walk. And even if you’ve been through the process in the past the goal posts seem to move faster than you can keep up. One of the reasons I love (most days) my work is that I am able to spend as much time as I need with my clients helping them understand their financing. When I worked for one of the chartered banks in a previous life I was so tightly scheduled that when our time was up that was it. Someone else had an appointment that I needed to be on time for. Clients have different learning and communication styles. Some come well-versed and understand the mortgage process; others have not done any research and need a lot of hand-holding. My goal is to make sure that by the time they are signing their legal paperwork in front of their lawyer my clients understand the decisions they have made and the rationale behind them. Whether it is the first time you are buying a home or you are looking to refinance your current mortgage it is important that you find a professional to work with that is patient and non-judgmental. In a beautiful world you connect with someone that has bought and sold a few of their own homes and has been working in the mortgage world for a while. It can feel very intimidating to bare your soul to a complete stranger. We often don’t share details of our finances with anyone except our banker / spouse and in some cases I find clients may feel embarrassed about the state of their finances. We see via social media others living lavish lifestyles and somehow feel we should be doing the same. The bottom line is that whether this is your first plunge into the homeownership pool or you are a veteran in the market, it is so important to connect with someone that takes the time to understand your situation and your goals. Knowing your long-term plan and how you handle your finances can help your mortgage professional set you up for success. Please please please make sure you ask all of the questions, even if you think you should know that answers. Guessing that you understand something or bluffing without listening to your mortgage professional’s advice can cause unnecessary grief down the road.