Income Verification

Income verification is a key piece of your mortgage qualification. Once we understand how your income is derived, then we will work with you on identifying what will be needed. To give you an idea of what that may look like, we have listed it here:

  1. If you are working for someone else, & on salary....

    We will need you to obtain a Job Letter that verifies the details of your employment & income. You will also need to provide a recent paystub. Some lenders will call to verify the information provided.

  2. If you are Self Employed....

    Sometimes self employed individuals can find it difficult to qualify for financing because their income has been reduced on their tax returns. For this reason our lenders will look at your income in a couple of different ways:

    1. They can take your income on your last 2 years of your tax records and gross up your income, OR
    2. If you have a minimum of 2 years in the same business, an average income of what the average individual would normally earn in a similar position can be used. To support that, we would also need to provide the lender with confirmation that you have been self employed for a minimum of 2 years. This can be satisfied using a variety of documents, which may include any of the following:
      • Sole Proprietorship or Partnership
        • Business license
        • Canada Revenue Agency's Notice of Return Adjustment/Summary (for a GST return)
        • T1 Generals with Statement of Business Activities attached for a minimum of 2 years
        • Financial statements for the last 2 years, prepared and signed by an accountant
        • Account documentation for an active business or commercial bank account.
      • Corporation
        • Articles of Incorporation
        • Financial statements for the last 2 years, prepared and signed by an accountant
        • Account documentation for an active business or commercial bank account.

If you are purchasing a rental property, or already own one and we are going to use that income for your mortgage application, here are some examples of how lenders will consider that ......

RENTAL INCOME

Each of our lenders use different methods of calculating how much rental income they will count towards income for qualifying, and typically will discount a certain percentage to allow for you having some vacancy. This discount can range anywhere from 50 - 80% on average. There are a couple of different ways that rental income is then used:

  • Offset - This is where they take a percentage of your rental income, and compare it with how much your new mortgage payment will be. If you are collecting more from your tenant than is required for your new mortgage payment, then they will add the difference to your personal income. If what you are collecting in rental income is short of what your new mortgage payment would be, then we just need to ensure that your personal income can support that.
  • Addback - With this method a percentage of your rental income is added to your personal income, and the new mortgage payment is then deducted from that.

Because of the large variety of lenders we have to choose from for you, we will find one that is best suited for your personal situation.