What documents do I need to get a mortgage?
What documents do I need to get a mortgage?
Sometimes it feels like the question should be, “what don’t I need to provide” amirite? Lol. Seriously though, there is a purpose for all of the documents your banker/broker/lender is requesting – I promise. To simplify things, I’ve separated each into categories and let me be clear by saying that this list is not exhaustive. Keep in mind that every individual’s situation is unique, and so the paperwork required can often be just as unique. As long as your Advisor can clearly articulate the “why” of what they are asking for, then it’ll only serve to strengthen your application, the more information you are able to provide.
Income documents:
Paystubs (recent, usually dated within 30-60 days) – this confirms your hourly rate or salary and any regular incentives received, along with confirming that you are still actively employed by the company.
Job letter – serves a similar function as the pay stub and can often be used in lieu of. May be requested where income on paystubs is variable or when you’ve started a new job.
T4 – this is your company provided a statement of all income received and should very closely match your paystub. If your income is commission or a base-plus-commission, then generally, the last 2 years will be requested so an average income can be calculated.
NOA (Notice of Assessment) – this bad boy is the document that’s mailed back to you (or loaded into CRA online) after you’ve filed your tax return. Lenders will often request this for all borrowers (even salaried borrowers) to confirm that there are no taxes owed to the government.
But why does the lender care if I owe taxes to the government? Because not paying your income taxes has serious consequences, such as interest/fines/levies and potentially even jail time, which undoubtedly will affect your ability to make mortgage payments – not to mention that CRA also has the ability to put a lien on your house for taxes owed.
T1s and NOAs – If you’re self-employed, a contract employee, real estate investor, or some combination of all of the above, you’ve likely been asked for a combination of your T1s and NOAs. The biggest challenge that I often see is that borrowers often only provide one or the other, causing delays with the mortgage application. Think of T1s and NOAs like socks – they go together as a pair. Why? Because they validate each other. The T1 is the document you file (therefore, it can be easily tampered with/adjusted), and the NOA is the document the government confirms, so they should match up.
You may also be asked for T1s if you derive a lot of your income from a T5 slip (investment income, dividends) or are a pensioner. Where the T4s and T5s only show part of the story, the T1 tells the whole income tale, so if you have it handy, it can be great to share upfront.
What about income that doesn’t show up on any of the above? That’s a tricky one – as a general rule, income must be declared to be used, but there are some exceptions to this. Perhaps you recently became self-employed (within the last 12 months), or you only started renting your basement suite a few months ago? Sometimes lenders will consider bank statement history, contracts, or even copies of rent cheques, but that would be on a case-by-case basis.
Down payment documents:
Now that the lender has qualified your income, the next question is going to be, how much are they purchasing for, and what are they putting as a down payment? Keep in mind that mortgage legislation in our country is designed to protect consumers and the system from rampant fraud, and the only way to do that is to ensure that the source of an individual’s funds is verified. Sold another property? Congratulations, a copy of the sale agreement will do the trick. Did you get an inheritance from granny? Not a problem, share with the lender a copy of the will or the lawyer’s letter that accompanied the cheque. Invested funds in the stock market that outperformed your expectations? That is awesome, and even better, there is always a paper trail. Provide your lender with a quarterly statement showing the funds available, and you’re good to go.
3-6 month account history - Most often, lenders will ask for an account history (though sometimes its 6 months) of your savings account. It can be a bank statement, an online banking printout (that clearly shows account ownership), or even screenshots in some cases. At first, this request may feel a bit uncomfortable (as in, I don’t want my broker to see how much I love shopping at Sephora), but I assure you it’s a federally legislated requirement and something that’s always requested in the normal course of business. I promise the lender isn’t trying to be nosy – and rest assured they are not interested in your daily transactions, but rather need something to verify that you’ve had the funds in your possession for a period of time and those funds are consistent with what someone would have accumulated based on your age, employment, and life stage. For example, if a 23-year-old applicant, who’s recently out of school and now working at Starbucks, approached me to buy a million-dollar house with $700,000 down payment, the first reasonable question any lender is going to ask is – how did she/she accumulate that amount of money? If there’s a common-sense explanation, then all the documentation is going to do is verify that.
RRSP/TFSA/other investment statements – Regardless of whether or not these funds are going to form part of the down payment, if you’ve established a savings plan for yourself, then verifying these assets goes a long way toward strengthening your application. It shows lenders that you can manage a budget and that you have liquid resources (i.e., a buffer if something were to interrupt your regular income). If anything, you should be proud to share all of the thought and consideration you’ve put into your future.
Property documents:
This list can be short or long, depending on the nature of the transaction. For example, if you’re refinancing, you’ll likely need to provide:
Copy of your home insurance policy
Copy of the strata insurance policy (if applicable)
Most recent Property tax statement
Proof of property taxes paid
Copy of any lease agreements (if rented)
If you’re purchasing:
Contract of purchase and sale
Detailed MLS listing
Property disclosure statement
I can honestly say that the only thing in 18 plus years of banking that’s remained consistent is how wildly inconsistent requirements can be. I’ve used all different types of verification throughout my career, and as policy continues to shift and evolve, new documentation requirements can come to light. But there is light at the end of that tunnel, and if you trust the Advisor that you’re working with, then trust that they are on your side and working hard to put together the strongest application possible to put you in the driver’s seat.
Questions? Let’s chat.