The process of qualifying for a mortgage can seem a bit intimidating but with a little preparation, it can go smoothly. There will be paperwork required to verify your income and your savings and if you start to gather it ahead of time it will help your pre-approval go more quickly. Here is a list of the most commonly required documents and why they want to see them:
Letter of employment
Unless you are in business for yourself, you will need a letter from your employer that is on company letterhead and describes your title, how long you have worked there, what you earn and the number of hours that you are guaranteed or if you are full time salaried. It needs to be signed by someone that can validate the information when the lender calls to verify.
Recent paystub
Along with the letter of employment, you will need to have a recent paystub which shows the lender that you are indeed being paid by the company on the letter and also helps them validate the number of hours that you are paid for.
Notice of Assessment (NOA)
This is the statement that CRA sends you after they have processed your tax return. It is the summary of the main lines from the tax return and at the bottom indicates if you owe any money or you have a refund coming. If you do/did owe them taxes, then you will also have to provide the proof that you have paid the amount. You can print a statement online from MyCRA or they usually will have mailed you another one showing a $0 balance. If you owe any taxes, they MUST be paid before you will be approved for a mortgage.
T1 General
This is the whole tax form that is completed and filed with CRA. It is not always required to be provided to a lender but it is good to have it handy just in case. If you are in business for yourself, it will be mandatory and if you have multiple jobs, are paid hourly, have any rental properties or other sources of income, you will need to have it. In any of these cases usually you will need to provide the last 2 years of this form. In cases of hourly or multiple jobs, often the last 2 years of your income will be averaged for your application, so they will need to see this form.
T4
This is the form that your employer(s) give you indicating how much money they paid you that year and how much tax was deducted. Again, it is not always required, but if you have multiple jobs, you will need to provide them, and likely for the previous 2 years.
Separation or divorce agreement
If you have previously been married you will be asked to provide your separation or divorce agreement to show what support payments you make or receive, or to show that there are none. The lenders need to understand all of your debt obligations.
Bank statements and investment/RRSP statements
If you have saved your down payment, usually we are required to show 90 days of history of those funds. This is due to the anti-money laundering laws in Canada. You will need a statement that shows your name and account number and the previous 90 days of history. If you have any large deposits that are greater than $2000 and that are not payroll, you may be asked to explain where the funds came from. Again, due to the Canadian laws.
Bankruptcy or consumer proposal discharge
If you have been discharged from one of these recently, you may be asked to provide the formal discharge paperwork.
Rental properties
If you own any other properties you will need to have the mortgage statement, tax statement and lease/rental agreements for your tenants. These are all required to show what your debts are on those properties and then what the income you generate is.
These are the most commonly requested documents, however there may be more or different requests depending upon each person’s individual situation and where/how their income is made. Ensure that all of the paperwork is clean and clear and do not write on them or black/white anything out.
It might seem like a lot of work or bother but you must remember that you are asking a lender to loan you over a hundred thousand dollars and they need to verify that everything you tell them in the application is true so that they feel confident that you will be able to make your payments to them