Have you ever wondered what the income requirements are when applying for your mortgage approval?
Whether its a refinance or a purchase it always seems to be a task gathering all those documents that the banks/lenders require. Sometimes, it seems that there is always one more hoop to jump through, or one more document to retrieve in order to complete your application. In fact, there is quite a few documents needed when considering the 3 factors of your approval, but this post will focus solely on income.
3 Types of Income
Firstly, lets break down the income into Self Employed, Employed, or Other. All income can be broken down into these 3 main types.
- Someone working for themselves, in a partnership, incorporated, making dividends fall into Self Employment for example.
- Someone working for someone else relying on a salary or hourly wage falls into employed.
- Other income would be considered ODSP, OAS, CPP to name a few examples.
(You can use all three types, or just one when applying for an approval)
Secondly, You’ll need to provide Mortgage Suite with the following:
- identification.
- proof of employment.
- proof you can pay for the down payment and closing costs.
- information about your other assets, such as a car, cottage or boat.
- information about your debts or financial obligations.
Proof Of Employment:
- Employed individuals generally speaking need to provide
- 2 most recent pay stubs
- a job letter
- If there is inconsistencies in these three items we may require more info
- Child Tax Benefit also falls into this category, and can be used for you approval.
- Self-Employed Individuals and Other income individuals would need to provide a bit more
- Your last 2 years taxes such as,
- see the break down here
- Notice of assessments
- For more information on these types of income check out the Government of Canada website.
These income factors produce ratios that show you can afford the mortgage payment. Always remember, there are quite a few more expenses when it comes to owning a home. Depending on the amount of proof you can provide regarding your income would depend on what type of borrower you are as well. Additionally, a job change can affect your income requirements to a lender.
