Knowing how much you will need in the future will help you financially prepare for a baby. Depending on your costs, income, and current debts, you may be wondering if it’s possible to get a loan while on maternity leave. Thankfully, applying for a loan while on maternity leave is possible in Canada.
Yes, applying for a loan while on maternity leave is possible. Mothers who are away from work because they’re expecting or have recently given birth are only entitled to receive a maximum of 15 weeks’ pay. After that, parents may apply for parental benefits which can offer:
Given this situation, new parents may find the next few months financially tight, but a maternity leave loan can help cover any lost income during this time. Traditional loans typically require that you have steady employment and earn a sufficient salary. But since you’re not working during maternity leave, your lender may consider your maternity benefits as a source of income when assessing your loan application.
If approved, you can use the extra funds to cover a myriad of expenses, including all the costly items needed to raise a baby.
| Loan Amount | Interest Rate | Term | Province Availability | ||
 | $500 - $35,000 | 2.99% to 46.96% | 4 - 60 months | Across Canada | Learn More |
 | Up to $35,000 | 9.99% - 46.96% | 6 - 60 months | BC, AB, SK, MB, ON, NB, NS, PEI, NL | Learn More |
 | Up to $20,000 | 19.99% - 46.8% | 12 - 60 months | BC, AB, ON, NB, NS, PEI, NL | Learn More |
 | Up to $15,000 | Started at 19.99% | Open-end | BC, AB, SK, ON, NS, PEI, NL | Learn More |
 | Up to $1,500 | Varies by province* | Max 62 days | BC, AB, MB, ON, NB, NS, PEI | Learn More |
 | $200 - $1,500 | Varies by province* | Next payday | BC, AB, SK, NS, YT, NT, NU | Learn More |
 | $50 - $1,500 | Varies by province* | 14 days | BC, AB, SK, MB, ON, NS | Learn More |
 | Up to $1,500 | Varies by province* | Up to 62 days | BC, AB, ON | Learn More |
 | $120 - $1,500 | Varies by province* | Max 62 days | BC, AB, SK, MB, ON, NS | Learn More |
 | Up to $1,500 | Varies by province* | Max 62 days | BC, AB, SK, MB, ON, NB, NS, PEI | Learn More |
It’s easier to get a loan on maternity leave these days thanks to the rise in online lenders. Lack of traditional income is no longer a deterrent for securing a loan with alternative lenders that cater to the underbanked. As long as you bring in sufficient income — even from government benefits while on maternity leave — you can still obtain a loan.
Check Your Credit Score
With a regular source of income, your risk as a borrower will increase. To help offset some of that risk, consider improving your credit as much as you can before applying for a loan. High credit scores indicate that you’ve been a responsible borrower who paid their debts on time. If you’re not sure what your credit score is, you can check it for free through Compare Hub.
If you’re looking to take out a loan while you’re off work with your newborn, your best bet is to apply directly with an alternative online lender. Ideally, you should apply for a loan before you leave work, as being employed can strengthen your loan application. That said, alternative lenders often accept other sources of income besides a traditional salary.
You’ll need to provide the lender with proof of incoming funds from the statements you receive from Service Canada. The lender may require that your income meets a minimum threshold, which is usually no less than $1,200 per month, though this varies by lender.
If your maternity leave benefits are not enough to meet the lender’s requirements, you may be able to use the income from your partner or parents to bridge the gap. In this case, you could add them to your loan contract as a co-signer, with your lender’s permission.
There are alternative lenders in the private lending sphere that specialize in providing personal loans to those who are currently off work and receiving government benefits, including Canadians on maternity leave.
As long as you bring in an income that meets the lender’s minimum threshold, you may qualify for a maternity leave loan. Depending on the lender, you may also need to meet other criteria, such as a minimum credit score and debt-to-income ratio. That said, many of these lenders do not have such requirements.
You’ll need to do some comparison shopping to see what each lender’s specific requirements are before applying to ensure to satisfy them.
If you’re looking to take out a loan while on maternity leave, here are a couple of options available:
A maternity leave personal loan provides a lump sum of money that is paid back in installments over a specified period, usually anywhere from 6 to 60 months. Payments include both principal and interest portions and can be made monthly, bi-weekly, or weekly. The higher your interest rate, the more you’ll pay towards interest, and vice versa.
You can borrow as little as $500 up to $50,000, depending on your financial profile and credit score.
A maternity leave payday loan provides you with a lump sum of money that must be repaid in full by the time you receive your next paycheque.
Since you’re on maternity leave and are not currently receiving pay from work, your payday loan repayment would be due the next time you receive your next pay from the government. No installment payments are involved, and instead, you’re required to make your payment in full when it’s due.
Payday loans are very expensive, with APRs reaching as high as 546%. As such, you’ll be paying a lot in interest compared to the principal. You need to make sure that you’ll have the funds needed to fully repay the loan by the time payment is due, including both the original loan amount and interest.
These are another loan option and are generally more beneficial to borrowers with bad credit or who are having trouble qualifying for regular loans for whatever reason. In order to get a guarantor loan, you would need to get a trusted friend or family member to co-sign your loan. Ideally, they should have good credit and decent finances (reasonable income, steady employment, etc.).
Before applying for a maternity leave loan, consider the following tips to maximize your chances of approval and to get the best deal:
If you’re not already on maternity leave, consider applying for a loan while you’re still working. This will maximize your chances of approval since you’re still earning a traditional income and will ensure that the money is in your account before you go on leave.
While your bank is always an option for a maternity leave loan, you may want to look into alternative lenders for a loan. In fact, you may have a better chance of getting approved with an alternative lender, especially if you’re already on maternity leave and are not earning as much as you did while working. Alternative lenders are also a better option if your credit score is low.
Alternative lenders let you pre-qualify for a loan before applying. That way, you can find out if you’re eligible for a loan and will know what interest rate you’ll pay.
Interest rates are not the only cost associated with maternity leave loans. There may also be other fees attached to your loan that you should understand, as they’ll add to the overall cost of the loan. For instance, your lender may also charge origination fees, early prepayment penalty fees, and NSF fees, among others.
Before you apply for a maternity leave loan, get all the necessary documents together so they’re ready to be submitted along with your loan application. These may include the following:
Most people don’t realize how expensive it is to have a baby, so some parents may become cash-strapped after having a child. A maternity leave loan can help with the following:
While there are many benefits to a maternity leave loan, there are also some drawbacks to consider:
Maternity leave represents the period of time a woman takes off work in order to nurture and raise her newly born or adopted child. This benefit is provided by the government to employed women who are pregnant, just gave birth, or are caring for a newborn or adopted baby. Eligible women can get up to 15 weeks off through this benefit, after which they can choose one of the two options below:
Standard Parental Benefits – This benefit lasts up to 40 weeks and can be used by both parents.
Extended Parental Benefits – If parents want extra time to care for their children, they may apply for extended parental leave. This benefit offers up to 69 weeks of benefits and is shared between the parents.
| Canada Child Benefit (CCB) | Learn More |
| Nova Scotia Child Benefit (NSCB) | Learn More |
| The Newfoundland And Labrador Child Benefit | Learn More |
| The Ontario Child Benefit (OCB) | Learn More |
| Nova Scotia Child Benefit (NSCB) | Learn More |
| Alberta Child and Family Benefit (ACFB) | Learn More |
| Maternity/Parental Leave | Learn More |
As you can see, with a loss of income, baby expenses, and regular daily costs of living, having a baby is an expensive process. Luckily, there are government benefits and personal loans that could help with financing your maternity leave. Just remember, borrowing money can be risky, but with the right guidance, it can be immensely helpful. You should borrow an amount that will cover the extra baby expenses and the lost income. To ensure your best chances at receiving a loan with your maternity leave, make sure you have a positive credit history, along with at least one current and constant income.
Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.
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