Mortgage Blog

What Documentation Will I need?

October 30, 2012 | Posted by: Laurie Anne Faulkner

What Documentation Will I Need for My New Mortgage?

When buying a new home or refinancing your existing mortgage, certain documentation is needed to support your mortgage request. By providing us with the documents that we have indicated on this list, we can finalize your mortgage more quickly and efficiently.

Confirmation of your down payment and closing costs

  • Savings or investments statement from within the last 90 days (that include Name, Account and Transit number of account owner)
  • Sale of an existing property — a copy of the unconditional contract of purchase and sale agreement if down payment is coming from this source
  • Gift letter – for gifted down payment signed by gift-or
  • Withdrawal from RRSP through Home Buyer’s Plan
  • Confirmation of 2% of the purchase price for closing costs in the bank to cover Property purchase tax/ lawyers/appraisals etc.

Employment Income and verification:

Your monthly income will help determine how much you qualify for. Lenders (and insurers) look mainly at cash flow. By cash flow, I mean that your maximum house payment (principle & interest, property taxes, and utilities) will be determined by a certain percentage of your gross monthly household income – this is your Gross Debt Service Ratio (GDS). You are also allowed a certain percentage for all debts (mortgage, credit cards, loans, etc.) – this is called your Total Debt Service Ratio (TDS) and includes your Gross Debt Service or mortgage payment amount.

For high-ratio mortgages, the GDS Ratio should be between 32% and 34% with a maximum that the lender will look at being 39%.  For example, if your gross monthly income were $3,000, then the amount allotted for your house payment (principle & interest, property taxes, and utilities) would be $960. The TDS Ratio for high ratio mortgages is usually 40% to 44%. So in this same example $1,200 would be the limit designated for your total monthly debt (including your house payment).

The guidelines for conventional mortgages are more relaxed. Unlike high-ratio mortgages, there are no hard and fast rules when you have a down payment of 20% or more – the amount allowed for GDSR and TDSR vary from lender to lender. Check with me for more details.

Types of Income:
Types of income vary, so the required income verification will depend on your type of employment and may consist of the following verification:

  • Copy of last 2 most recent pay slips
  • Letter of employment- signed and dated with contact number
  • Notice of Assessment from Revenue Canada showing no taxes owing (NOA) (2 years)
  • T1 General (if self-employed)
  • Permission to take your Credit Bureau

Here are some general guidelines for verification requirements depending on your employment (some, or all, will be required):

Type Of Income Typical Verification
Salary
  • Job letter, current pay stub, T4 or NOA, contact person.
Commission
  • 2-year average of income from NOA -may need 2 years tax return
Self-employed
  • Current Year Notice of Assessment from CCRA , may need 2 to 3 years full tax returns and business license / incorporation papers
Contract
  • 2 years history (T4′s), job letter, Current Year Notice of Assessment from CCRA, recent pay stub
Hourly
  • Job letter, pay stubs, contact person.
Pension
  • Pension statement, bank statement showing deposit(s). Current Year Notice of Assessment from CCRA

It is helpful to verify your declared income as soon as possible in the mortgage application process because this will ensure accurate calculations and help avoid any surprises.

You can check with me to determine which verification is appropriate for your employment/ income. This verification can be Emailed to Me , dropped off, or faxed to me at (250) 598-4036.

Separated or Divorced?

  • A copy of your separation agreement showing no obligation/obligations to the family home/ spousal/ child support agreement

Do you currently own your home?
Information that describes your existing property:

  • Most recent mortgage statement
  • Current homeowner insurance policy
  • Most recent property tax bill/statement showing property taxes paid for current year
  • Legal description of your property (you can find this on your original purchase agreement or property tax statement)
  • survey certificate if availabe

Buying a home?
Information that describes the property you are buying:

  • Purchase and Sale agreement
  • Property Condition Disclosure Statement
  • Form B If property is Strata titled
  • MLS listing with photo
  • Survey certificate if available
  • Name, address, telephone number of your solicitor/notary
  • Copy of a void cheque from the account you would like your mortgage drawn from each month
  • Before completion you will need to purchase house insurance
  • Copy of any lease agreements if the property has a suite which income is being used to qualify with
  • Your Realtor’s name and Contact information along with permission to talk with them

Other information we may require

As part of your application process, we will ask you questions relating to what you owe and own, what some of the projected expenses relating to the property are, such as taxes, heating costs and condo fees, and whether you will be using the property to generate income.

Please call me if you have any questions 250-588-2288 – Laurie Anne Faulkner

View More Information on First Time Home Buyers

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