Ryan Anderson - Your "Motivated" Mortgage Broker!

ryan.anderson@mortgagegrp.com 204-479-0775

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What Do I Need to Qualify for a Mortgage?

Lenders and banks typically look at 4 main areas. The stronger you are in each area, the increase in the likelihood of qualifying. I'm happy to advise on specifics moving forward once you have applied. Here's a quick summary of what you need to know. 
  • Income - Depends on how you earn your income, length of time in the same industry and being able to show it on paper. 2 years minimum is preferred. See below for specific income types.
  • Credit Score - Ranges from 400 to 900. To qualify for a mortgage with less than 20% down, you need a minimum beacon score of 600 to 620. From 680 to 700 or above, your score is excellent and you qualify for all products available. An important factor is to ensure you have at least two trade lines (car loan, credit card, lines of credit, personal loan, etc) for a minimum of 2 years. That helps establish and show that you are able to pay your bills on time over a longer period.   
  • Down Payment - They range from 5% and up. Cash back products are available but they are not to be used directly for the down payment. Typically they come with a higher rate and can be clawed back (or owed back) if you break your term early. The bigger the downpayment, the less insurance premium you pay. If you put 20% down, you avoid CMHC and insurance premiums altogether and have access to even more mortgage lending options. Down payment can come from gifts (in most cases), Investments, RRSP's, Inheritance, a confirmed sale and a few others. It's important that you can prove the source on paper. Typically lenders want to see 3 month bank statements or investment history to see where your down payment is coming from.
  • Qualifying Ratios - This takes into consideration your entire picture. Your income, compared to your debts, heating costs, taxes and other monthly obligations. Depending on your credit score you can qualify anywhere from 40% to 44% of your gross income, compared to your Total debts. In other words, you can't borrow more than 44% of your gross income every month. This ensures that you can afford all of your payments. Our computer software programs take everything into consideration with a variety of factors to determine what you qualify for and we explain the process as we go through it together.  

 What type of income are considered and what paperwork do I need for each?

In most situations lenders require a comfort level that the borrower has sufficient income and cash flow to service the mortgage as well as any other monthly debts and obligations. The following is a summary of what Lenders require depending on what type of job you have. Please note that every deal is different and exceptions can be made below depending on your unique situation.


Salaried Employees

  • Job Letter - Should be on company letterhead, signed by Human Resources, Supervisor or appropriate individual, indicate your position, rate of pay and length of time at employer. If you are a recent hire, the letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable. 

  • Pay Stubs - Most lenders will require a recent pay stub.

Hourly Employees

  • Pay Stubs - showing year-to-date income.

  • T4's - 2 years using the average.

  • Notice of Assessment - (NOA) - most recent to confirm no taxes owed.

Commission Income

  • T4's and/or Personal Tax Returns (T1 Generals) - 2 years using an average

  • Job Letter - confirming position.

  • Notice of Assessment (NOA)

Self-Employed

  • Financial Statements of Company - 2 years average of net income used. Depending on Lenders policies, the add-back of various personal expenses run through the company may be allowed including Amortization, CCA (Capital Cost Allowance), Business Use of Home and Motor Vehicle Expense.

  • NOA's (Personal Notice of Assessments).

  • Personal Tax Returns - ( T1 Generals showing personal net income). Line 150 used for Income.

Overtime - Will be used as long as there is a proven track record - 2 years evidence (T4's).

Bonuses - 2 yr track record required.

Part-time Job - depends on length of time at job and if guaranteed permanent hours.

Tips - generally not recognized unless declared for tax purposes.

Alimony and Support - Evidence that payments have been made regularly and a copy of seperation agreement is required. Investment Income - must be received continuously. This source of income is limited to interest, dividends or some type of ongoing revenue.

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