Mortgage Documents: A Guide To What You’ll Need When Applying

When you reach the application stage in the mortgage process, you’ll need to present a variety of documents to your prospective lender. These mortgage documents will include information regarding your personal finances, personal identification, and the property you’re hoping to purchase.

Knowing ahead of time which documents to prepare can help keep your mortgage application on track. The exact documents you’ll need may depend on the particular lender you work with, as well as your employment status and other variables. Let’s have a look at some commonly required mortgage documents.

Identification Documents Needed For A Mortgage

First and foremost, a lender needs proof they’re dealing with the real you. Make sure you have the following means of personal identification:

• A government-issued photo identification (ID), like a driver’s licence or passport, that reflects your current address
• Your Social Insurance Number (SIN)

Some lenders may require two or more forms of photo ID, so it might be a good idea to have multiple forms of identification on hand.

Income And Employment Documents For A Mortgage

Other mortgage requirements include documented proof of your income, employment and any other financial assets you have. These can tell a lender whether you make enough to afford the mortgage you’ve applied for, as well as other monthly expenses you have.

Be prepared to provide any or all of the following income documents:

• Pay stubs: Your most recent pay stub (from the last 30 days) should verify your current employer and wages.
• Tax forms: A T1 General tax return will show your total earnings from the previous tax year, and your annual T4 details your wages from your current employer.
• Notice of Assessment (NOA): You should’ve been issued an NOA from the Canada Revenue Agency (CRA) at the end of the previous tax year, which details your annual income, tax bills and tax refunds. Lenders will use your NOA to help determine your debt service ratio (DSR), also known as your debt-to-income ratio.
• Letter of employment (LOE): You can request a letter of employment from your employer. This document will detail your current position, wages, how long you’ve worked for that particular employer and other important details. Letters of employment should include company letterhead and a signature from a manager or human resources representative. They should also be dated within the last 30 days.

Financial Documents For A Mortgage

In addition to records of your income and employment, you’ll also have to provide documentation showing your personal finances are in good standing. This will give lenders a sense for your creditworthiness.

Have the following financial documents on hand when applying for a mortgage:

• Bank statements: Lenders may request bank statements from the last few months, sometimes years, to get an idea of your bank account activity.
• Proof of assets or investments: Lenders will often require statements listing all of your liquid assets, investments and other capital. These can include real estate, vehicles, boats, stocks and registered retirement savings plans (RRSPs).
• Mortgage preapproval letter: If you’re preapproved for a mortgage, provide your preapproval letter. Sometimes, this alone can demonstrate that you can meet credit and income requirements for your mortgage, and possibly qualify you for lower interest rates.
• Other sources of income: If you regularly receive payments from disability, rental income, spousal support or other sources, submit statements for these as well. Earnings from other sources of income may impact how much mortgage you can afford in the eyes of a lender.

In addition to all of these documents, you’ll need to grant a mortgage lender permission to make an inquiry into your credit report. This allows a lender to view your credit score and determine your creditworthiness for the mortgage. Be aware that this credit check can affect your credit score slightly.

Down Payment Documents For A Mortgage

You’ll need documentation that proves you have the funds for a down payment. The documents you have to produce may depend on where you plan to source your down payment funds.

• Statements for savings or investments: If using your savings, provide bank statements for an active savings account showing activity from the last 90 days. Submit a written document detailing your liquid investments if using those funds.
• Sale agreement of your existing property: If you’re selling an existing property and using the proceeds to buy a new home, provide the sale agreement or a record of the transaction.
• RRSP withdrawal documentation: Canadian first-time home buyers can withdraw from their Registered Retirement Savings Plan (RRSP) accounts as part of Canada’s Home Buyer’s Plan (HBP). If you’re eligible for the HBP, you’ll need to submit documentation that details your withdrawals to your mortgage lender.
• Gift letters: If a close friend or family member is helping out with your down payment, you’ll have to provide a gift letter stating that this money is a gift, not a loan to be paid back. This letter should include the name and signature of the gifter, and the amount being gifted.

Property Documents For A Mortgage

Finally, lenders require information about the property you’re using the mortgage to buy. This documentation can include:

• Final purchase and sale agreement: This document represents the final terms of the real estate transaction, including the final purchase price. Banks and lenders will use this document to determine your mortgage principal and down payment.
• Real estate listing: The listing from the multiple listing service (MLS) is required so lenders can estimate the costs of utilities, property taxes and any applicable fees, such as condo fees.
• Legal description of the home: A legal description includes the full address and postal code of the property. This information may also be included in the purchase and sale agreement.
• Homeowners insurance policy: Most mortgage lenders require that you secure homeowners insurance to purchase a home. Send in a copy of the policy you’ve purchased or are planning to purchase.
• Well and septic certificates: If you’re purchasing a home with a well or septic system, you’ll need to provide proof that it’s been inspected and certified by a professional.

What Documents Do Self-Employed Home Buyers Need?

Lenders may require some additional documentation from self-employed home buyers, since their income can be seen as less stable than income from a third-party employer. Self-employed borrowers should prepare to submit the following:

• T4A tax forms: A T4A slip provides details of income earned from self-employed commissions, contract work and other sources of income.
• 3 years’ worth of tax returns: Self-employed buyers may be seen as having less reliable sources of income. Because of this, lenders want to see a more extended period of tax returns to determine whether the buyer has regular income.
• Business articles of incorporation: Mortgage lenders may request documentation proving the legitimacy of your business and income. This can include a business licence, articles of incorporation and your business’s credit report.

The Bottom Line

There are a lot of steps to a mortgage application, but being prepared and organized ahead of time can make the process go that much smoother. While you may not need to provide all of the documents listed above, having them on hand can save you a lot of time when submitting your mortgage application. Your situation may require additional documentation, so speak with a mortgage expert or your real estate agent to make sure you have everything you’d need.

Ready to purchase your new home? Start the mortgage process today with Rocket Mortgage Canada, UL (Rocket Mortgage™).