Gone are the days of one income during a mortgage application. Instead nowadays, many people have varied income sources and are curious to what is acceptable income and how to add it to your mortgage application.
In this article, I will discuss how to use extra income (like a second job or your Canada Child Benefit) and the different types that are accepted by lenders.
There are many people that have second jobs. But, did you know that there are specific requirements to be able to use it as income?
If you have a second job, this income can be used during your mortgage application if you are not on probation and have been there for two years in addition to your primary job.
If you also have irregular income such as overtime, seasonal income, commission sales, bonuses or tips, this can most likely be used as well. You will likely be required to show how stable this income is. You will do this by providing at least a two year track record of T4’s with the same employer. The average income over these two years would be calculated and used during qualifying.
There are many people who use their Canadian Pension Plan and their Old Age Security as their income to qualify for a mortgage. Just because you’ve retired and are not working, doesn’t mean you aren’t able to qualify!
In the same line, disability income can be an acceptable source of income depending on the situation and the lender.
If you are receiving EI, this income may be able to be used towards your mortgage application. This type of extra income will depend on why you’re receiving EI and how long you’ve been getting it for. It may be accepted by lenders if this type of income is shown to be recurring and cyclical. For example with loggers or fishermen who don’t work throughout the full calendar year.
Did you know that if you’re receiving CCB, you are able to put this as extra income on the mortgage application?
During conversations with clients, I will always ask if you have children, how many, what age and what you’re receiving for Canada Child Benefit. I am able to use this payment towards your mortgage application assuming the children are under a certain age which ranges from 12 to 15 years old depending on the lender.
If you’re receiving regular alimony or child support payments through a court order or separation agreement, we are able to use those payments as extra income towards a mortgage application. It will vary by lender how much of it can be used to contribute towards your total income.
If the home you are buying has a current suite that is being rented out and you will continue to rent it, we will be able to use that income towards your mortgage. For some lenders, 100% of suite rental income will be used.
Additionally, if you have other rental properties, we should be able to use that rental income as well towards your earned income. The amount lenders will use depends on the lender and can range from 50% of the income added to your income, 80% of investment rental property income or a rental worksheet some lenders have. Different lenders will have different policies which may be more beneficial in different situations.
If you are currently fostering a child or work in respite care, this income may be used towards your earned income as well. You must have a two year history with this income and lenders will like to see the contract has been renewed or is ongoing.
In 2024 people are bringing in incomes in different ways than previous generations. But, not all income is created and viewed equally. Luckily for you, I’ve become skilled at being able to use extra income towards a mortgage approval. I hope this article helped you understand how to use extra income and what forms of income are acceptable.
If you’re ready to begin your mortgage application, Give me a call at 250-826-3111, apply on my website or contact me through my online contact form to start the process today.
Let’s get your application off the ground.
