Purchase Mortgage in Vancouver: Know Your Number First

How much can you actually borrow?

Lenders look at five things: your income, your expenses, your assets, your debts, and your credit. The first four feed two debt service ratios, and the ratios produce a ceiling; your credit decides which lenders and which pricing are open to you. Two people with the same income can land far apart, because income is counted differently depending on the file.

Then there is the stress test. Most federally regulated lenders make you qualify at your contract rate plus two percentage points, or at a floor rate, whichever is higher. The rate you sign is not the rate you are approved on, so your ceiling is generally lower than a payment calculator suggests.

The stress test does not apply everywhere: it binds federally regulated lenders. Credit unions sit outside that rule, and B and private lenders mostly look at the property's value and your equity (LTV). Which route makes sense depends on your whole picture.

A number you can rely on comes from running your actual documents once. Everything before that is a direction, not a number.

What does a pre-approval actually lock in?

It locks a rate, not an approval. Most lenders hold a rate for a set window, commonly a few months, and it expires. It also tells you roughly what range you sit in based on what you have handed over so far.

What it does not lock is longer. The property has not been appraised, income verification may not be finished, and your debts can change in the meantime. Final approval is against a specific property and a complete file.

A real pre-approval means a lender has read your documents. An online calculator is arithmetic.

Should you shop for a home first, or a mortgage first?

Mortgage first. Once you know your number, every listing you walk into is one you can act on.

The other order has a real price. Finding out after an accepted offer that the financing is short means adding cash, renegotiating, or walking away from a deposit. Sellers here generally prefer clean offers, and a real pre-approval changes where you stand.

How much down payment do you need, and what else has to be cash?

It can be as low as 5%, tiered by price; below 20% down it becomes an insured mortgage. What your own minimum is — and how much cash to keep on top of it — takes one quick run of your numbers.

Under 20% down means an insured mortgage and an insurance premium, usually added to the loan. At 20% or more there is no premium, but underwriting can be tighter, because no insurer is standing behind the file.

Budget closing costs separately: BC property transfer tax, legal fees, inspection, adjustments. First-time buyers may qualify for a transfer tax exemption depending on price and status. That money cannot come out of the down payment.

What changes if you are self-employed?

Lenders read your tax returns, not your revenue. Most A lenders average the net income on your last two years of filings, which is often well below what the business actually produces.

There are generally three routes. Clean up two years of filings and go conventional; use a program built for business-for-self borrowers, which usually asks for more down payment or prices differently; or work with a lender that reads bank statements, where the cost is higher. Which one fits depends on your filings and your down payment.

The most useful move is deciding two years ahead. Writing income down to the floor and then applying is the trade that costs people the house. How you file is a question for your accountant. I only speak to the lending side.

New to Canada. Can you get a mortgage?

Generally yes, but through a different door. Most lenders have programs for applicants with a short Canadian credit history or foreign income, and they usually ask for more down payment and heavier documentation.

Three things trip up newcomer files: almost no domestic credit history, income documents from a foreign employer, and down payment funds that just landed. The last one matters most. Most lenders want the funds seasoned in your own account with a clean paper trail back to the source.

There are also federal restrictions on non-Canadians buying residential property, with exceptions. Confirm where you sit on status before you make plans.

Who is this hardest for, and what should they do?

Three groups: self-employed people who file low, newcomers with no domestic credit, and anyone carrying late payments, a consumer proposal, or a bankruptcy. The problem is usually not income. It is that the file does not tell a story a lender can sign off on.

The fixes are specific. Self-employed: plan filings two years out, and keep financial statements and bank statements ready. Newcomers: open a credit card on arrival, pay it in full and on time, and document where the down payment came from. Bruised credit: clear the delinquencies, get card balances well under their limits, and let a few months pass before applying.

If waiting is not possible, B lenders and private lenders exist. The rate and the fees are higher, and they are generally a bridge for a year or two, not a destination. My job is to get it done, not to put you in a product you do not need.

What documents are needed, and how long does it take?

Salaried: two recent pay stubs, a job letter, two years of T4s and Notices of Assessment, 90 days of history on the down payment funds, and photo ID. Self-employed adds two years of full T1s and Notices of Assessment, business financial statements, and proof the business exists.

With a complete file, a pre-approval generally takes a few business days. Real approval starts when you have an accepted offer, and with the appraisal and verification it usually runs one to two weeks. Every missing document moves the date back.

This is general information, not advice on your specific situation. What your file looks like is something someone has to actually read.

Common questions

If rates drop after you are pre-approved, do you get the lower one?

Most lenders will give you the lower rate if the market moves down before funding, but the rules differ by lender — some apply it automatically, others only if you ask. This only holds before your rate is locked in; once you've committed to a rate, moving to a lower one usually means re-locking, which can reset your hold period. It's worth confirming this specific policy with your lender in writing before you rely on it, since a verbal reassurance isn't the same as a written term. Ask the question up front rather than assuming it works the way your last mortgage did.

Does shopping several lenders damage your credit score?

Multiple inquiries for the same purpose in a short window are generally treated as one shopping event, not several separate applications — credit-scoring models build in room for people comparing lenders before a big purchase. Going through a broker makes this simpler still: one application and one credit pull can usually be shown to several lenders at once, instead of you personally applying to each one and generating a separate inquiry every time. Where it does add up is spacing applications out over months, or mixing in unrelated credit applications at the same time — that's harder for the file to read as one shopping event.

Can the down payment be a gift from parents?

Generally yes. Most lenders want a signed gift letter confirming the money does not have to be repaid, plus a paper trail showing where it came from and that it actually landed in your account before you apply. The letter alone usually isn't enough — lenders want to see the money move, not just a promise that it exists. If the funds are coming from overseas, build in extra lead time, since the trail takes longer to assemble and lenders will ask for it before they'll count the deposit as yours. Sort this out early rather than the week before your subject removal.

Can you change jobs after being pre-approved?

Try not to. Lenders usually re-verify employment before funding, and a new job, a probation period, or a switch to commission-based pay can send the file back to the start — sometimes with a different, less favorable answer than your original pre-approval. This isn't about loyalty to your current employer; it's that the pre-approval was built on a specific, provable income, and a new role usually can't prove itself the same way until you've been in it a while. If a move is unavoidable, tell your broker before you accept the offer, not after — there's often a way to structure the timing so it doesn't blow up the file.

Does a pre-approval commit you to that lender?

No. A pre-approval doesn't bind you to that lender, and there's no cost to walking away from one. It's a rate hold and a rough read on what you qualify for, not a contract — one option on the table, not a commitment you're locked into. When you actually find a property, your broker checks it against every lender available at that point, not just whichever one issued the pre-approval, and you go with whichever fits the deal best. Getting pre-approved with one lender is a sensible starting point, not a decision you have to defend later.

Is a presale condo financed the same way as a resale?

No. Deposit structure and completion timing are different — a presale usually has deposits spread over the construction period instead of one lump sum at completion, and the gap between signing and moving in can run into years. Most lenders handle presales through long-term rate hold products priced on their own terms, which aren't the same product as a standard resale mortgage and aren't offered by every lender. Because the completion date is often years away and can shift, it's worth checking financing eligibility before you sign the purchase contract, not after — a developer's marketing material isn't a substitute for a lender actually confirming they'll finance that building.