5 things to do before applying for a mortgage in Alberta

Don't Just Dream—Prepare

Falling in love with a home is the easy part. But before you start scrolling through listings or attending open houses, there is some essential groundwork to cover. Applying for a mortgage is like preparing for a marathon: you wouldn't just show up at the starting line without training! To ensure a smooth approval and help you secure the best possible rates, follow these 5 essential steps before you sign on the dotted line.

1. Check Your Credit Score & History

Your credit score is one of the most critical factors lenders use to determine your reliability. In Canada, you can access your credit report for free once a year from Equifax and TransUnion. For regular free monitoring, I also really like Borrowell.

What to look for: Check for any errors or outdated information that could be dragging your score down.

Target Score: Some lenders will accept a credit score as low as 600, however you should aim for a score of at least 680 to qualify for the most competitive rates. 

2. Reduce Your Debt

Lenders look closely at your Total Debt Servicing Ratio (TDSR) ratio—the percentage of your monthly income that goes toward paying off debts. 

Pay down balances: Focus on high-interest debt like credit cards & lines of credit first. They’re not just expensive - carrying balances on these types of credit can really affect your credit score and pre-approval amount. 

Avoid new debt: Do not take on new loans (like a car lease) just before or during your application, as this can significantly lower the amount you qualify for. 

3. Gather Financial Documents (Canadian Checklist)

Gathering these early will save you from a last-minute scramble. Here is what most Canadian lenders will require if you’re paid hourly or on a salary:

• Proof of Income:

  • Your two most recent pay stubs.

  • A signed Letter of Employment (dated within 30 days).

  • Your last two years T4 slips from all employers

• Proof of Down Payment:

  • Bank statements from the last 90 days showing the history of your funds. This will be required for each account you will be using toward your down payment

• Identification:

  • Two pieces of valid ID (e.g., Driver’s License & Health Card). If your driver’s license is about to expire, be sure to renew it!

4. Save for Down Payment & Closing Costs

Beyond the down payment, don't forget to budget for closing costs. Many lenders recommend having a buffer of 1.5% of the purchase price available for things like legal fees, inspections, and any adjustments at closing. 

Example: $400,000 x .015 = $6,000

This doesn’t mean that your closing costs will actually be $6,000. This is just an extra buffer to ensure that you don’t run short on funds before possession day.

Take advantage of incentives: Look into the First Home Savings Account (FHSA) or the RRSP Home Buyers' Plan (HBP) to help boost your savings tax-free. 

5. Get Pre-Approved

A pre-approval gives you a clear understanding of your budget and shows sellers you are a serious buyer. 

Lock in your rate: Many lenders will “hold” a current interest rate for up to 120 days while you shop.

Know your limit: You’ll know exactly how much you can afford, preventing the heartbreak of falling for a home that's out of reach. 

Ready to Start Your Home Journey?

Don't navigate the complex Canadian mortgage market alone. Whether you're a first-time buyer or looking to upgrade, I'm here to help you find the best rate and product for your unique situation.

Reach out today to start your pre-approval application, or start one HERE! If you aren’t quite ready to get started on an application, you can also download my mortgage planner app to crunch some numbers on your own first

~Kristen