What Documents are Required to Qualify for a Mortgage?

Being prepared in advance for a mortgage is always beneficial because the mortgage process is a document intensive process and can require significant time to complete. Before being approved for a mortgage, it is essential that the lender has reviewed all the pertinent documents before a potential homeowner begins their house-hunting process. It is also imperative that the pre-approval certificate is obtained by the borrower and the pre-approval agreement is received in writing.

The pre-approval agreement should contain the pre-approved mortgage amount, the mortgage term, interest rate, payment information and the expiry for the pre-approval, normally the agreement is valid for up to 120 days. In order to prepare for the mortgage pre-approval process, the following are the documents required and should be available prior to submission.

1. Letter of Employment: Having employment is one of the key factors that ensure a mortgage approval. Lenders would like to see a letter from your employer, on a company letterhead that outlines your nature of job, your position, the day you started working for the company, and the hourly wage / salary you make at the company. Furthermore, the lender will also check whether you have guaranteed work hours and if there is a probation period if you are a new employee.

2. Previous Two Pay Stubs: In addition to the letter of employment, the lender will request your two most recent pay stubs. These must indicate the company name, your name and all tax deductions.

3. Supporting Documents for Additional Income: It would be also beneficial for you to show your lender any other additional income that you are receiving. This income can be from child support, long-term disability, part-time income, etc.

4. Notice of Assessment from Canada Revenue Agency: It is required by lenders that you show your tax assessment from the previous year. If you do not have a copy, you can request one from the CRA by mail, which can take 4-6 weeks, or you can login to your online CRA account to access them.

5. 3-Month Bank Account History: Lastly, it is essential for lenders to see your 90 days bank statement history for any funds that you will be using for your down payment. Because saving for a down payment requires a lot of time, there should be no issues for you when providing these documents. If you have received funds as gift from a family member, or from selling your car or your previous house, then it is important for you to show your lender a proof regarding the source of funds.

Another important aspect to consider is that if you are a part-time employee, you would still need to show all the above documents, however, you will need to provide two years’ worth of Notice of Assessments, versus just one. Furthermore, you will also need to have been working for at least two years in the same job to use part-time income.