Few things are more stressful than finding your dream home, only to face rejection at the mortgage approval stage. Even if you’ve been pre-approved by multiple lenders, missing a critical detail can derail your application. Here’s what Ottawa and Ontario home buyers need to know to avoid this situation.
A Cautionary Tale
One couple in Ontario thought they had everything in place: multiple pre-approvals and a clear path to making an offer. But their applications were unexpectedly declined. The reason? Their income had recently changed, and the lenders had relied on outdated documents from previous years. Without verifying current income, their pre-approvals weren’t valid, leading to disappointment and delay.
The Three Critical “Legs” of Mortgage Approval
Mortgage approval rests on three main factors: income, credit, and down payment. Each must be strong and stable for your application to succeed.
- Income
Lenders need to confirm your ability to repay the mortgage. They’ll check your current employment, income stability, and total earnings. Job changes, reduced hours, or lost overtime can affect your qualifying amount. - Credit
Your credit history shows lenders how reliable you are with debt. On-time payments and manageable debt strengthen your application. A solid credit score increases your chances of approval. - Down Payment
The size and source of your down payment matter. Larger down payments often mean lower rates, while smaller ones may require mortgage insurance. Always provide documentation proving where your funds come from.
Why Traditional Pre-Approvals Can Be Risky
Many pre-approvals focus on basic criteria and may not verify recent income changes or other financial updates. This can give buyers a false sense of security, leaving them vulnerable to last-minute rejections.
How to Make Your Pre-Approval Rock Solid:
- Submit Updated Documents: Provide your lender with the latest income proof, credit report, and down payment documentation.
- Verify Your Financial Stability: Avoid major changes—new debt, job changes, or large purchases—between pre-approval and closing.
- Work with an Experienced Broker: A knowledgeable mortgage broker will review all aspects of your application, ensuring it meets lender requirements.
Buy with Confidence
With careful preparation, Ottawa and Ontario buyers can approach their home purchase knowing their pre-approval is solid. Avoid surprises, protect your dream home, and make sure you’re ready to act when the right property comes along.
