Mortgage Documents: The Essential Guide to What You’ll Need When Applying

When you get to the mortgage application stage, you’ll need to gather a bunch of documents for your lender. These help them understand your finances, ID, and the property you’re buying.

Getting everything ready in advance will make the whole process smoother and keep things on track. Just keep in mind that each lender might have slightly different requirements depending on your job, situation, and other factors. Here’s a quick look at some of the common documents you’ll probably need when applying for a mortgage.

Identification Documents Needed

The first step in the process is proving who you are. Your lender needs to verify your identity to make sure they’re dealing with the right person. To do this, you’ll need to provide two forms of ID, one of which must be a government-issued photo ID. Here’s what you’ll typically need:

• Your Social Insurance Number (SIN)
• A government-issued photo ID, such as a driver’s license or passport, showing your current address.

All lenders require two forms of ID, and at least one of them must be government photo ID, so it might be a good idea to have multiple forms of identification available.

Income And Employment Documents For A Mortgage

One of the main 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 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 Return: A T1 General tax return will show your total earnings from the previous tax year, and break down any additional income. The lender will require the full 30+ page T1 with all schedules. You can get this from your accountant or the software you used to file your taxes.
• T-Slips: Be prepared with 3 years of ALL T-Slips. A T4 details your wages from your current employer. A T5 shows investment income. A T4a shows commission income, etc.
• 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. You’ll need to provide the two most recent years
• 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 3-4 months, and sometimes 1-2 years, to show proof of income deposits.
• 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).
• Other sources of income: If you regularly receive payments from disability, CCB, 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.

Along with all these documents, you’ll also need to give your lender permission to check your credit report. This lets them see your credit score and assess whether you’re a good fit for the mortgage. Just a heads-up, though — this credit check can cause a small dip in your score.

Down Payment Documents For A Mortgage

You’ll need documentation that proves you have the funds for a down payment and closing costs, such as property transfer tax. 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 90-120 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 or FHSA 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 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:

• 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. 
• Strata Docs: If you’re buying a strata property you will want to read these, but also so will the lender. They want to make sure that there are no big expenditures coming up, and if there are any – that you’ll have the funds to pay for them.
• Appraisal: If you’re putting down 20% or more – be prepared that the lender will likely want an appraisal. These are an out of pocket expense of $400-600 and the lender uses the report to ensure that they are lending hundreds of thousands of dollars on a property that is valued at the price you’re buying it for.

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.
• 2 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. Minimum 2 years of FULL (30+ pages) of T1’s.
• Business articles of incorporation: Mortgage lenders may request documentation proving the legitimacy of your business and income if you’re incorporated. 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 the mortgage application, but being prepared and organized from the start can make things way easier. You might not need every document listed above, but having them ready can save you a ton of time when you apply. Depending on your situation, you might need a few extra papers, so it’s a good idea to chat with a mortgage expert or your real estate agent to make sure you’ve got everything covered.

Ready to buy your new home? Let’s get the mortgage process started today!