Are you thinking of buying a home in the near future? If so, your first task may be to speak with a mortgage broker or lender to find out where you stand financially.
A big part of the mortgage application process is providing your lender with various documents. So, what type of paperwork will you need to supply when applying for a mortgage? We’ve provided a handy and detailed mortgage document checklist for you to follow when applying for a home loan.
Key Points
- Mortgage lenders will need to see proof of your income, employment, debts and financial situation before extending a mortgage, and various document types are needed to prove this information.
- If you’re self-employed, you may need to supply additional documentation to prove your income.
- You can speed up the mortgage application and approval process by gathering all necessary documents in advance of applying for a mortgage.
Mortgage Documents Checklist In Canada
Before you are approved for a loan, your lender will want to do a thorough analysis of your financial health first. This will help them determine whether you’re financially stable enough to secure a mortgage, and what type of interest rate and terms you can get if you are approved.
In order to do that, your lender will need to assess various documents related to your financial profile. You’ll be responsible for supplying these documents to your lender as part of the mortgage application process.
Just about every lender will require specific types of documents. And while your lender may ask for additional documentation, be prepared to provide the following documents when you apply for a home loan.
Do you know what the minimum credit score needed for mortgage approval is?
Personal Information Documents
Your lender will want to verify your identity. As such, you’ll need to supply the following documents to prove who you are:
- Government-issued photo ID – Your ID will need to include your current address and be non-expired.
- Social Insurance Number (SIN) – Your SIN number is required for employment in Canada, filing your taxes, opening a bank account, and accessing various government benefits.
Employment/Income Documents
To be able to make your mortgage payments every month, you’ll need money coming in on a regular basis. Your income will need to be stable and adequate to not only fully cover each mortgage payment, but all other debts that you may have as well. Ultimately, your lender wants to make sure you’ll be able to continue making mortgage payments throughout the entire term period, and they’ll ask you for certain documents to prove it:
Pay Stubs And Tax Returns
Your current pay stubs will prove how much money you make on a regular basis.
Your tax returns will show how much money you earned in the previous year, which can help prove how creditworthy you are.
T4/T4A Tax Forms
Your T4 tax form shows your income amount as an employee, while a T4A tax form details all forms of income, including pensions and investment income. If you’re an employee, you’ll receive a T4, while self-employed commission individuals will use a T4A.
Notice of Assessment
Canada Revenue Agency (CRA) provides employed persons with a notice of assessment every year after their tax returns are submitted. It will list any outstanding taxes that you still owe, helping the lender determine your total debt-to-income ratio.
Letter Of Employment From Your Employer
Your lender will want to know what your job title and status is to make sure that your position is stable and is not expected to be downgraded in the future.
Learn more about applying for a mortgage when you’re self-employed.
Personal Financial Documents
Any personal information that affects your ability to pay your mortgage or shows your creditworthiness may be requested, such as the following:
- Bank account information – Your lender will want your bank account information and transit number for mortgage payment purposes.
- Statement of assets or investments – Your assets and investments will be worth a certain amount, which can be used as part of your down payment or can simply serve as a back-up in case your income falters at some point.
- Pre-approval letter (if applicable) – If you were pre-approved for a mortgage (which is highly recommended), your lender will want to see this documentation.
- Credit report – Your lender will pull this report on your behalf, which will show your credit score and will help prove your creditworthiness. You can check your credit score for free using Loans Canada’s CompareHub tool.
- Any additional income sources (if any) – Anything else that you may have that can prove your full income may be asked for by your lender.
Are There Any Particular Documents You Need As A Self-Employed HomeBuyer?
As a self-employed individual, you may be required to provide some other documentation such as:
- 2 years of personal tax returns – If you work for yourself, you will need to prove that you have been bringing in a regular income over the past few years. Your tax returns will help show this.
- Business articles of incorporation (if incorporated) – Lenders will be able to determine if you are able to pay your bills on time and have enough money for your mortgage payments by looking at your business’s credit report and articles of incorporation.
Down Payment Documents
You will need to put a down payment toward a new home purchase in order to secure a mortgage, and that money has to come from somewhere. Here are some documents you may be required to submit to prove where the funds from your down payment are coming from.
Savings Or Statement Of Investments From The Last 90 Days
Any savings that you have accumulated or money you made from investments over the last 90 days should be provided to your lender via a written document.
Sale Agreement Of An Existing Property
Any proceeds from a current home that you have sold that will be used for your down payment must be proven to the lender, which you can do by supplying a copy of the real estate transaction.
Withdrawals From Your RRSP Through The Home Buyer’s Plan (HBP)
If you are buying your first home, you may be eligible to use money from your RRSPs to put toward your down payment through the Home Buyers’ Plan.
Gift Letter (if applicable)
If any money that you are using toward your down payment came from a friend or family member as a gift, you will need to supply a Gift Letter stating that the money is a gift and not required to be paid back.
Property Documents
Your lender will require documents for both the property you are selling and the new one you are buying.
Documents For The Property You Are Purchasing
- Purchase and sale agreement – This document will detail the terms of the home purchase, as well as how much you are paying for the home. Your lender will need this to anticipate your principal amount and to verify the percentage of your down payment.
- MLS listing – The lender will want to see the original listing of your home as it was marketed, which will also include other important pieces of info, such as property tax estimates, condo fees (if applicable), and heating costs.
- Legal description of the home – This includes the full address and postal code.
- Proof of property insurance – Most mortgage lenders will want to see proof of property insurance before they extend a loan. This will protect the home against damage or vandalism and will also protect the lender’s investment.
- Title insurance – Mortgage lenders may require title insurance in case someone else has a stake in your property.
- Well and septic certificates – These are applicable mainly to rural properties.
- Status Certificate (if buying a condo) – Lenders typically order a Status Certificate if you’re buying a condo, as this document will disclose additional liabilities.
Documents For The Property You Are Selling
- Recent mortgage statement – This will tell the lender how much you still owe on the home and how much equity you have in it.
- Legal description of the home – You should be able to obtain this information from the original purchase agreement of the home or your property tax statement.
Tips To Speed Up The Mortgage Application Process
As you can see from the above-mentioned documents, applying for a mortgage can be a very involved process. All those documents you provide will need to be carefully reviewed by the lender. But there are things you can do to expedite the process:
- Make sure your application is complete and accurate – If there is information missing on your mortgage application, or the information you provide is inaccurate, this will surely cause a delay in the mortgage process. Before handing in your application, make sure it is filled in completely and is free of mistakes.
- Gather all necessary documents in advance – If possible, try to locate all the documents you need so they’re ready to be supplied along with your mortgage application
- Stay organized – Keep all your documents organized so they’re easy to access when required. If you prefer the paper route, keep a folder to stash your documents in proper order. If you’re going digital, have all your e-files stored in a digital folder kept safe but easily accessed when needed.
Final Thoughts
Applying for a mortgage is an in-depth process that requires a lot of investigation on the part of your lender. But there’s also a lot for you to do as well; namely, gathering all the pertinent documentation that your lender requires and submitting it in a timely manner. The more detailed the information you provide, the more streamlined the process can be, helping you secure a mortgage sooner rather than later to help you finalize a home purchase.
Mortgage Documents FAQs
Will my credit score be negatively affected if my lender pulls my credit report?
How long does it take to get approved for a mortgage?
Can a mortgage broker help me with my mortgage application?
Note: Loans Canada does not arrange, underwrite or broker mortgages. We are a simple referral service.
