Documents Required For Mortgage Financing in Canada
Salaried:
Current pay stub
Letter of employment (must be on company letterhead and have the following: outline of compensation, year-to-date (YTD) earnings, job tenure, supervisor, or HR contact info).
Hourly Income:
Current pay stub
Letter of employment (must be on company letterhead and have the following: outline of compensation, year-to-date (YTD) earnings, job tenure, supervisor, or HR contact info)
T4s or Notices of Assessment from the last two years
Base + commission income:
Notices of Assessment from the last two years
Letter of employment (must be on company letterhead and have the following: outline of compensation, year-to-date (YTD) earnings, job tenure, supervisor, or HR contact info)
Commission:
Notices of Assessment from the last two years (NOAs are two-page documents summarizing your annual income that the CRA sends you after you file your taxes)
Statement of YTD earnings
Tax returns from the last two years
Self-employed:
Notices of Assessment from the last two years
T1 Generals for the last two years or taxes filed
Proof of being self-employed such as one of the following: GST Number, Articles of Incorporation, Statement of Business Activity from your Tax Return, Business License.
Pension:
Notices of Assessment from the last two years (NOAs are two-page documents summarizing your annual income that the CRA sends you after you file your taxes)
Statement of pension income or bank statements from the last three months showing pension deposits.
Maternity:
Notices of Assessment from the last year
Letter of employment stating your return to work date (must be on company letterhead and have the following: outline of compensation, year-to-date (YTD) earnings, job tenure, supervisor, or HR contact info.
Current pay stub
Letter of employment (must be on company letterhead and have the following: outline of compensation, year-to-date (YTD) earnings, job tenure, supervisor, or HR contact info).
Hourly Income:
Current pay stub
Letter of employment (must be on company letterhead and have the following: outline of compensation, year-to-date (YTD) earnings, job tenure, supervisor, or HR contact info)
T4s or Notices of Assessment from the last two years
Base + commission income:
Notices of Assessment from the last two years
Letter of employment (must be on company letterhead and have the following: outline of compensation, year-to-date (YTD) earnings, job tenure, supervisor, or HR contact info)
Commission:
Notices of Assessment from the last two years (NOAs are two-page documents summarizing your annual income that the CRA sends you after you file your taxes)
Statement of YTD earnings
Tax returns from the last two years
Self-employed:
Notices of Assessment from the last two years
T1 Generals for the last two years or taxes filed
Proof of being self-employed such as one of the following: GST Number, Articles of Incorporation, Statement of Business Activity from your Tax Return, Business License.
Pension:
Notices of Assessment from the last two years (NOAs are two-page documents summarizing your annual income that the CRA sends you after you file your taxes)
Statement of pension income or bank statements from the last three months showing pension deposits.
Maternity:
Notices of Assessment from the last year
Letter of employment stating your return to work date (must be on company letterhead and have the following: outline of compensation, year-to-date (YTD) earnings, job tenure, supervisor, or HR contact info.
Documents Required To Prove Your Down Payment
If saved up for a down payment:
Bank or investment statements from the last three months (90 days) from the account that holds your down payment
If received a gift from an immediate family member for a down payment:
A gift letter and confirmation of that gift in your account at least 15 days before possession
A gift letter signed by the family member gifting you money
A bank statement showing the gifted funds in your account
Down payment from property sale proceeds:
Firm sale agreements on the property showing the market value
A recent mortgage statement showing your mortgage balance.
Bank or investment statements from the last three months (90 days) from the account that holds your down payment
If received a gift from an immediate family member for a down payment:
A gift letter and confirmation of that gift in your account at least 15 days before possession
A gift letter signed by the family member gifting you money
A bank statement showing the gifted funds in your account
Down payment from property sale proceeds:
Firm sale agreements on the property showing the market value
A recent mortgage statement showing your mortgage balance.
Getting A Mortgage With Pension Income
In Canada, as long as you meet the specific qualifications for receiving a pension, you are allowed to finance your home purchase using an insured mortgage.
The biggest difference when obtaining a mortgage with pension income is that it is treated similarly to self-employed income, in that there are no restrictions on the amount of income available for loan repayments.
There are, however, a number of criteria that must be met:
1. The pension income needs to have been earned over the course of time in which you qualified for Canada Pension Plan Benefits or Quebec Pension Plan benefits (or similar provincial pension plans). For example, if you received CPP benefits for 25 years, you would need to have earned that income over your lifetime.
2. The pension needs to be guaranteed for the entire length of the amortization schedule (i.e., 20 or 25 years). An unguaranteed pension is not considered secure enough to provide loan security and so some lenders will not accept this type of plan.
3. If you are married, your spouse must be willing to take on second mortgage responsibility. However, if the spouse does not sign the application for a second mortgage, then the insurance company may require that they provide income information themselves in order to determine whether or not repayment will be possible upon one income becoming insufficient for the mortgage.
4. You must have a down payment of at least 5 percent (and up to 20 percent) available for use on the purchase price. The remaining amount can be financed via conventional financing. If you do not, then your lender may require that you buy mortgage loan insurance (which will increase the monthly payment).
The biggest difference when obtaining a mortgage with pension income is that it is treated similarly to self-employed income, in that there are no restrictions on the amount of income available for loan repayments.
There are, however, a number of criteria that must be met:
1. The pension income needs to have been earned over the course of time in which you qualified for Canada Pension Plan Benefits or Quebec Pension Plan benefits (or similar provincial pension plans). For example, if you received CPP benefits for 25 years, you would need to have earned that income over your lifetime.
2. The pension needs to be guaranteed for the entire length of the amortization schedule (i.e., 20 or 25 years). An unguaranteed pension is not considered secure enough to provide loan security and so some lenders will not accept this type of plan.
3. If you are married, your spouse must be willing to take on second mortgage responsibility. However, if the spouse does not sign the application for a second mortgage, then the insurance company may require that they provide income information themselves in order to determine whether or not repayment will be possible upon one income becoming insufficient for the mortgage.
4. You must have a down payment of at least 5 percent (and up to 20 percent) available for use on the purchase price. The remaining amount can be financed via conventional financing. If you do not, then your lender may require that you buy mortgage loan insurance (which will increase the monthly payment).
