Income Sources

A breakdown of what income sources make a difference when securing your mortgage

Exploring Income sources for your mortgage application:

When it comes to securing a mortgage, understanding which sources of income count can make a significant difference. Here’s a breakdown of income types that lenders typically consider when evaluating your mortgage application:

1. Salary/Wages:

Whether you’re paid by the hour or have a regular salary, this is a straightforward addition to your mortgage qualifications. You can easily prove your income with documents like a letter of employment, current pay stubs, T4 slips, and Notice of Assessments. Consistency over the past two years enhances your attractiveness to lenders. If you’ve recently switched jobs, let us know so we can navigate this appropriately.

2. Commissions/Bonuses:

If you receive commissions or bonuses in addition to your regular wage/salary, these can also be considered. The key is consistency. If your commissions/bonuses have remained steady (both in amount and frequency) for two years or more, lenders are more likely to factor them into your mortgage eligibility. If you’re solely commission-based, your history’s consistency is vital to determine affordability.

3. Tips:

For those in industries where tips are a common supplement to income (think servers in hospitality or even consistent tip-based earnings from Uber/Lyft driving), you can include these as long as you declare them on your tax returns.

4. Self-Employed Income:

CMHC’s recent adjustments have offered more flexibility for self-employed borrowers, especially if you’ve been running a business for less than two years. If you’ve been profitable for a while, that’s even better. Documents such as T1 General tax packages, Notice of Assessments and company financials (if incorporated) can help validate your income.

5. Rental Income:

Own a rental property? You can count the revenue as income for another mortgage application. Typically the mortgage lender will require to see the income claimed on your T1 Generals, or if a newer rental, a lease agreement and bank statements showing the rental deposits will suffice.

6. Investment Income:

Certain investments like securities, bonds, and dividend-bearing options may be included if you demonstrate consistent income for the past two to three years. However, speculative income won’t likely be counted.

7. Alimony and Child Support:

These forms of income count, especially if court-mandated. Consistent payments and the stability of the provider are crucial factors.

8. Retirement Pension:

Proven and consistent retirement pensions are considered. You can include Old Age Security (OAS), RRSPs, PRPPs, RRIF payments, and other pension income.