Everything to Have Handy When Applying for a Mortgage
It’s finally here! You’ve saved your pennies for this exact moment and can finally apply for a home loan to purchase your first-ever house. But before you can skip across that front doorstep of your dream home, there will undoubtedly be some important paperwork you’ll need to provide and fill out along the way.
Don’t stress – this checklist will help set you up for mortgage success so you can feel prepared, empowered, and in charge of your mortgage process from the application form to the closing table and beyond.
Print out this checklist or save it to your desktop for easy reference throughout your loan application process. And be sure to keep all your documentation in one place for easy reference. Now, let’s get you feeling good about your home loan preparation!
The Lend Easy Mortgage Completion Checklist
- Personal Identification
The first step in the process is identity verification. This is simply so your lender can be certain they’re lending to you and not someone pretending to be you. All you need to provide is a valid form of identification, which includes: a driver’s license, passport, health card issued by a province or territory, or federal-issued ID card. And rest assured – you’ll most likely only need to provide one of these forms of identification.
- Your SIN Number
- Pay Stubs
You’ll need to provide your pay stubs from the past month (30 days) to help verify your monthly income and show proof of employment. You can provide copies of printed checks and electronic copies of your pay stubs, or can request electronic statements from your employer or bank.
- Bank Statements
Bank statements may seem a bit invasive, but they’re incredibly important as they show that you can afford your down payment. These statements may also uncover any red flags like bounced checks, insufficient funds, unstable income, payments to other bank accounts, and large deposits from unknown sources.
You can typically pull your bank statements from your online account or ask your bank to print them for you. You’ll want to pull your statements from the past 2-3 months and make sure the total amount in your account is accurate.
- Tax Documents
And this is why your parents always told you to hold onto those tax forms. When applying for a home loan, your tax documents are another way to verify your income and show how much has been taken out for taxes. You’ll typically be asked to provide your tax forms for the past two years from your current and past employers within that time frame. These include your T1 General Tax Form (most common), T4, or T4A tax forms (T4A is for self-employed applicants).
- Investment Account Statements
Savings and checking accounts aren’t the only places people keep their money – and your job may not be your only source of income. Lenders want to see all your income and assets to calculate your net worth. This may include cars, boats, real estate, RRSPs, and stocks. You’ll need to pull statements for these from the past 90 days.
- Notice of Assessment
At the end of each successful tax filing, the Canada Revenue Agency (CRA) provides a Notice of Assessment (NOA) document that details any outstanding taxes you may owe. This helps lenders determine your debt-to-income ratio. You’ll most likely be asked to provide these from the past two years.
- Articles of Incorporation or Business License
These are only for borrowers who are self-employed or have a corporation registered. These documents will help vendors verify if you’ve paid suppliers on time by running your business’ credit report.
- Letter of Employment
This is used to prove your job stability. The letter needs to be written with company letterhead, must be no older than 30 days, and should be signed by a manager or Human Resources representative from your company. The letter typically includes your employment duration, status, present title and role, annual salary rate or the number of hours, and the nature of your employment (full-time, part-time, or seasonal).
- Rental Information
Lenders want to be assured you’ll make your monthly mortgage payments on time. If you’re a renter, you’ll likely be required to show that you’ve made on-time rent payments in the past.
You may also be required to include the names and contact information of the landlords you’ve had previously. This will help the lender verify that you’ve upheld your financial responsibilities as a tenant. How far back you’ll need to show payments or landlord information may depend on your lender, but typically it’s for a timeframe of two years.
- Gift Letter
If a loved one gives you money to use as a down payment, a gift letter will be required to prove the money is not a personal loan that needs to be paid back. If it was a personal loan, it would add to your DTI (debt-to-income ratio) and possibly make it more difficult for you to pay back your loan.
A typical gift letter should include:
- The donor’s name, contact information, and relation to the recipient
- The recipient’s name and contact information
- The gift amount and date the gift was or will be received
- How the recipient will use the gift money
- Confirmation that the gift doesn’t need to be repaid
- Signatures of the donor and recipient
A credit report is one of the only documents on this mortgage preapproval checklist that you won’t need to provide your lender. They’ll pull the report themselves once they have your permission to do so. Be sure to check your credit score beforehand so there aren’t any surprises – you want to be an informed borrower and know where you stand when applying for a home loan. There’s power in knowledge!
Keep It All Together
Keep this list handy for when you’re ready to submit your first mortgage application. That way you won’t have to go searching for anything and interrupt this exciting process. It may seem like a lot of work at first, but once you’re walking through the doors of your new home it will all be well worth it!