Lead pre-qualification
Fast pre-qual on a lead's income, debt, and down payment to set realistic expectations on price range — before deep-diving into a full application.
Your scenario
Result
Pre-qual ≠ pre-approval. Always run the full pre-approval before submitting to a lender.
Pre-qual vs pre-approval — they're different
This is a pre-qualification — a fast back-of-envelope sizing exercise to set realistic expectations. It uses self-reported income, debt, and down payment to estimate a price ceiling. Pre-approval is the formal process: full application, credit pull, income verification, employment letter, and a rate hold from a specific lender (typically 90–120 days).
Brokers use pre-qual at the discovery stage; pre-approval is what gets a client ready to write offers.
Three credit tiers — what each costs
- A-tier (680+ beacon, clean file): bank pricing, typical 5-year fixed at posted minus 1.5–2.5%. Most files.
- B-tier (600–679, or A-tier with file issue): alt-A pricing, +1–2% above A. Lender fees common (0.5–1.5%).
- Private (sub-600, derogatory credit, very-short-tenure self-employed): 8–14% rates, 1–3% lender fees, 1–2 year terms. Bridge financing only.
How the pre-qual math works
The calculator runs a simplified version of the OSFI B-20 stress test:
- Qualifying rate = max(contract + 2%, 5.25%)
- Monthly income = annual ÷ 12
- GDS cap: 39% × monthly income
- TDS cap: 44% × monthly income − other monthly debts
- Shelter budget = lesser of GDS or TDS limit
- Mortgage P&I budget = shelter budget − ~$250 (rough property tax + heat allowance)
- Max mortgage = PV of P&I budget at qualifying rate, 25-year amortization
- Max purchase = max mortgage + down payment
The full affordability calculator uses real property tax + heating + condo fee inputs and produces a more precise number.
What to actually verify before pre-approval
- Credit report (Equifax + TransUnion) — pull both, look for discrepancies, address before applying
- Income docs: 2 years of T4s + most recent NOA + Letter of Employment for salaried; 2 years of T1 General + T2125 + business financials for BFS
- Down payment source + 90-day history: bank statements showing accumulation
- Existing debt confirmation: balances on cards / LOC / car loan / student loan
- Lease or mortgage statement for current housing
- Status of any current real estate: confirmation of sold + closing date if applicable
Verdict bands — what they mean for a buyer
- Excellent qualifier ($800k+): comfortably in the A-tier prime market, multiple lender options, best rates available
- Solid qualifier ($500k–$800k): still A-tier, full bank access; price range covers most starter homes in mid-tier Canadian markets
- Moderate qualifier ($300k–$500k): A-tier with some lender restrictions; consider increasing down payment or paying down debt to lift the ceiling
- Limited qualifier (under $300k): review credit, income, or debt issues; B-tier may be necessary if file can't be improved
Ways to lift a client's qualifying ceiling
- Pay down debt — every $300/mo of debt reduction adds ~$50k of mortgage capacity
- Add a co-signer — see co-signer impact calc
- Increase down payment — every $10k extra reduces the mortgage 1:1
- Document additional income — overtime, bonus, rental income with the right history
- Move to a credit union — provincially regulated, sometimes skip the stress test
- Switch to 30-year amortization — first-time buyers of new builds qualify for the extended amortization since Aug 2024