A mortgage pre-qualification is an initial estimate of how much you might be able to borrow. It is usually based on information you self-report, such as income, debts, and approximate credit score, and often does not involve a full credit check or document verification.

A mortgage pre-approval is formal assessment by a lender confirming how much you can borrow, at what interest rate, and under what conditions, subject to final property review. It typically includes a credit check and verification of income, assets, and debts. In competitive markets like Whitehorse, a pre-approval strengthens an offer because it shows the seller you have already been financially vetted.

Lending ratios measure how much of your income is required to service housing costs and total debt. Lenders use these ratios to assess affordability and risk.  Gross Debt Service (GDS) is the percentage of your gross income used for housing costs (mortgage payment, property taxes, heating, and condo fees if applicable). Total Debt Service (TDS) includes housing costs plus all other debts, such as car loans, credit cards, and lines of credit.

Conditions are requirements that must be satisfied before your purchase becomes final. Common conditions include financing approval, home inspection, review of condominium documents, and/or sale of an existing property. If conditions are not met within the agreed timeframe, the buyer may have the right to withdraw without penalty. Conditions protect first-time home buyers from committing before key information is confirmed.

During underwriting, the lender and/or mortgage insurer verifies all key information and evaluates both you and the property to ensure the loan meets regulatory, insurer, and internal lending guidelines. For first-time home buyers, underwriting typically includes: • Verifying income through pay stubs, T4s, or employment letters • Confirming down payment sources and account history • Reviewing credit history and credit score • Calculating lending ratios (GDS and TDS) • Assessing the property (type, location, condition, and value) • Confirming compliance with insurer rules if the mortgage is insured A mortgage may be pre-approved before underwriting is complete, but it is not fully approved until underwriting is finished and all conditions are satisfied.

The interest rate is the cost of borrowing money, charged as a percentage by the lender on your mortgage balance. It directly affects your monthly payment and the total interest you pay over time. Mortgage interest rates are influenced by market conditions, the Bank of Canada, and lender risk assessments, and they differ depending on the type of mortgage selected. There are two main interest rate types for Canadian mortgages: Fixed Interest Rate A fixed interest rate stays the same for the entire mortgage term (commonly 1 to 5 years). Your interest rate and payment amount remain predictable during that term, which makes budgeting easier. Fixed rates are often chosen by first-time home buyers who want stability and protection against rising interest rates. Fixed rates are determined by the Canadian bond market. Variable Interest Rate A variable interest rate can change during the mortgage term, usually in response to changes in the Bank of Canada’s policy rate. Variable-rate mortgages are typically expressed as a discount or premium to a lender’s prime rate. Payments may either stay the same with the interest portion adjusting, or fluctuate as rates change, depending on the mortgage structure. Variable rates can be lower than fixed rates over time, but they can be more difficult to budget for when rates are moving. As of the beginning of 2026, Prime Lending rate is at 4.45%. The rate you would likely see is within +/- 1% of this number.

Amortization is the total length of time it will take to fully repay your mortgage, assuming all scheduled payments are made. In Canada, amortization periods for first time home buyers are commonly 25 or 30 years. A longer amortization period lowers your overall monthly payment.

A mortgage term is the length of time your mortgage contract, including the interest rate and conditions, is in effect. It is not the same as amortization. The mortgage term describes how long your current rate and agreement last before renewal. In Canada, common mortgage terms range from 1 to 5 years, with 5-year terms being the most common.