After a slow start to the year, July’s real estate numbers confirm what many of us are seeing on the ground—sales are picking up again. Home sales were almost on par with this time last year, and the steady activity from June has continued into summer. While borrowing costs haven’t dropped again just yet, interest rate stability is helping restore buyer confidence. For anyone waiting for a sign to make a move, this is it.

Inventory levels remain high, with over 17,000 homes currently listed—well above the 10-year average. That means buyers still have plenty of options, and prices have stayed relatively flat. Sellers should take note: with more activity and stable pricing, the window of opportunity to list before competition tightens is still open. In other words, we’re in that sweet spot where the market is balanced, but change is brewing.

Whether you're buying or selling, this shift brings real opportunity. Buyers can still shop with leverage, and sellers who list now can avoid competing in a busier fall market. If you’re wondering what these numbers mean for your specific situation, let’s connect.

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Serious About Moving? Here’s Why Pre-Approval Should Be Your First Move

If you’re serious about buying a home, getting pre-approved for a mortgage is not just a helpful step—it’s an essential one. Pre-approval sets the foundation for your home-buying process by giving you a clear understanding of your budget, streamlining the offer process, and showing sellers you’re ready to act. But it’s about more than just your income—lenders take a comprehensive look at your financial picture, which can make or break your approval. Let’s explore why pre-approval should be your first move as a serious buyer, the potential complexities involved, and how to navigate them.

What Is Pre-Approval, and Why Is It Essential?

Pre-approval is a lender’s initial review of your financial situation to determine how much mortgage you qualify for. This isn’t just an estimate—it’s a formal process that looks at your income, debts, credit history, and down payment. With pre-approval, you’ll know exactly how much you can spend, giving you the confidence to search for homes within your price range.

For serious buyers, pre-approval offers several key benefits:

• Clear Budgeting: Know what you can afford before you start house hunting.

• Strengthened Offers: Sellers see pre-approved buyers as serious and reliable.

• Time Savings: Eliminate guesswork and focus on homes you’re qualified to buy.

Why Income Alone Isn’t Enough

While your income is a critical piece of the puzzle, it’s far from the only factor lenders consider. Here are some of the other elements that can significantly impact your pre-approval:

1. Credit History and Score

   • A strong credit score (typically 660 or higher) shows lenders that you’re a reliable borrower.

   • Late payments, high credit utilization, or past bankruptcies can lower your approval odds, even with a high income.

2. Debt-to-Income Ratio

   • Lenders assess how much of your monthly income goes toward paying debts like car loans, student loans, or credit cards.

   • Your Gross Debt Service (GDS) ratio should stay under 39%, and your Total Debt Service (TDS) ratio under 44%.

3. Mortgage Stress Test

   • In Canada, lenders apply a stress test to ensure you can handle higher interest rates. They calculate affordability using either the benchmark rate (5.25%) or your contract rate +2%, whichever is higher.

4. Down Payment

   • The size of your down payment affects both your mortgage approval and monthly payments. Down payments start as low as 5% for an insured mortgage and 20%+ for an uninsured mortgage. In expensive markets like Vancouver, 5% is the only way to get into a market.

5. Additional Costs

   • Property taxes, closing costs, and maintenance expenses are all part of homeownership and factor into your overall affordability.

What If I Currently Own a Home?

If you already own a home, the pre-approval process can still be complex. Owning property might give you equity to leverage, but it can also come with complexities:

1. Mortgage Payout Penalties

   • If you’re breaking your current mortgage early, you may face penalties. These can vary depending on your lender and the terms of your mortgage.

   • Some lenders offer portable mortgages, allowing you to transfer your existing mortgage to a new home without penalties.

2. Bridging the Gap

   • If you’re buying before selling your current home, you may need bridge financing to cover the gap between closing dates.

3. Calculating Your Equity

   • Your home’s current market value minus any outstanding mortgage balance represents your equity, which can be used as part of your down payment for the new property.

4. Not Always a Slam Dunk

   • Even with home equity and a solid income, other factors like debt levels or credit issues can still complicate approval.

Consult the Experts

Navigating these complexities is where professional advice is invaluable.

• Speak with Your Mortgage Professional: A mortgage broker or lender can help assess potential penalties, financing options, and whether porting your mortgage makes sense.

• Lean on Your Realtor: A good real estate agent will have strong mortgage contacts to connect you with professionals who understand your unique situation.

How Pre-Approval Prepares You to Make an Offer

Being pre-approved gives you the tools you need to act quickly and confidently when you find the right home. Here’s how it helps:

1. A Competitive Edge

   • In a competitive market, a pre-approval letter shows sellers you’re financially ready to buy, making your offer more appealing.

2. Streamlined Decision-Making

   • With a clear budget, you can narrow your search to homes you can afford, saving time and avoiding disappointment.

3. Fewer Delays

   • When you’re pre-approved, much of the financial review process is already complete, allowing you to close faster once your offer is accepted.

And How Do I Do It?

Getting pre-approved is easier than you might think. Here are the steps:

1. Choose a Lender or Mortgage Broker

   • Research different lenders and brokers to find one that offers competitive rates and personalized service. A broker can compare multiple lenders for you.

2. Gather Your Documents

   • Most lenders will require:

     • Proof of income (pay stubs, T4s, or tax returns for the self-employed).

     • Bank statements to verify your savings and down payment.

     • Details of existing debts like car loans or credit cards.

     • Government-issued ID.

3. Check Your Credit Score

   • Lenders will pull your credit report as part of the process, but it’s a good idea to check it yourself beforehand to catch any errors or red flags.

4. Submit an Application

   • Fill out the pre-approval application with your chosen lender. They’ll review your financial situation and provide a pre-approval letter indicating how much you qualify for.

5. Understand the Terms

   • Your pre-approval will specify the maximum amount you can borrow, your estimated monthly payments, and the interest rate (often locked in for 90–120 days).

6. Stick to Your Budget

   • Just because you’re approved for a certain amount doesn’t mean you should max it out. Consider leaving room for property taxes, home maintenance, and other costs.

Ready to Get Started?

Getting pre-approved isn’t just about meeting lender requirements—it’s about setting yourself up for success. From understanding your budget to preparing for additional costs, pre-approval ensures you’re fully equipped to make a strong offer and secure your dream home.

If you’re serious about buying, don’t wait to take this critical first step. I can connect you with trusted mortgage professionals and guide you through the entire process. Ready to get pre-approved and move forward with confidence? Let’s talk today!