Documents to include with your mortgage application
Planiprêt
Aug 28, 2023
1) Proof of income:
Of all the documents you need to provide for your loan application, proof of income is the most important, the most difficult to find, and the one that will take the most effort. Therefore, it is essential that you prepare properly so that you are not stuck with tight deadlines.
If you are employed, you will need to provide a recent salary statement and a letter signed by your employer. This letter must include your date of hire, position, salary, and employment status (permanent or temporary). The letter should not be too old; it is often required to be no more than 30 days old. If you regularly work overtime, have irregular hours, or have a relatively unstable income, you will also be asked to submit two federal Notice of Assessment statements.
If you are self-employed, you must provide the following:
- Your last two federal income tax returns (complete)
- Your last two federal notices of assessment
Your last provincial notice of assessment - Mortgage insurers (CMHC, Genworth) and some financial institutions may ask you for your company's financial statements from the last two fiscal years
When you apply for a mortgage loan, you will have to show that you have the necessary funds for the minimum 5% down payment, as well as the 1.5% covering part of the costs related to the purchase of your property. If you state that you will eventually find the necessary money, your promise to purchase will not be considered. You will have to prove your seriousness to the sellers by showing that the cash is real, and that it is available for the transaction as soon as you sign your promise to purchase.
Here are some documents that can certify the availability of your down payment:
- Your bank statements for the past three months showing that you have accumulated savings (and not a lump deposit suggesting a loan of any kind)
- Your recent investment and/or RRSP statements
- Legal proof of earnings such as a gift or inheritance, the amounts of which are recorded in your bank account
- A signed donation letter from a direct family member (parents, grandparents, children, siblings) and proof of donation (e.g. bank statement, investment statement)
- If your down payment comes from the sale of another property, you can provide:
- A copy of the complete promise to purchase
- A copy of your municipal tax bill
- A recent mortgage statement
- Proof of acceptance (without conditions) of the buyers' mortgage
3) Documents related to the property you intend to purchase:
If the property is being sold through a real estate broker, you will need to provide the following:
- The complete copy of the promise to purchase including all appendices,
- The multiple listing service (MLS) description of the property,
- The seller's statement.
If the property is being sold directly by the owner, you will need to provide the following:
- The complete copy of the promise to purchase including all appendices
- The description of the property, if available
- A recent copy of the municipal and school tax account
- A copy of the location certificate
Mortgage approval is one of the most demanding, yet stressful steps in the home buying process. Preparing your documents will help you avoid unpleasant surprises and will certainly help you feel less rushed through the process.
If you have any questions about the documents you need to provide when purchasing a house or condominium, don't hesitate to contact a mortgage broker.
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