[WORLD] Buying your first home is an exciting and rewarding milestone. Soon, you’ll have the peace of mind that comes from investing in your own real estate. But before you can settle in, there's a less enjoyable part of the journey—applying for a mortgage.
The mortgage application process can be a major source of stress. Questions about affordability, approval, and choosing the right lender can feel overwhelming. While getting preapproved can offer clarity on what you can afford, the preapproval process itself requires a significant amount of documentation.
Though gathering paperwork takes time, it will streamline the rest of your home-buying experience. Here’s a breakdown of the documents you’ll need to have ready.
1. Proof of Identification
Your first step is to verify your identity with your mortgage broker or lender. Lenders need to ensure you are who you say you are, and this verification helps prevent fraudulent applications.
Canadian law requires lenders to confirm the identity of all applicants—this protects both the lender and the integrity of the mortgage process. Any government-issued photo ID is acceptable, but make sure it lists your current address. You'll also be required to provide your Social Insurance Number (SIN).
2. Proof of Employment and Income
Next, you'll need to show that you have a reliable source of income. Since a mortgage represents a long-term financial commitment, lenders want to see proof that you can manage regular payments.
A steady employment history strengthens your application. If you've recently switched jobs, be prepared to explain the change and provide documents that support your ongoing income stability.
Documents commonly accepted include recent pay stubs, tax slips such as T4s or T1s, or an official letter from your employer. Self-employed applicants should be ready to submit comprehensive financial records covering the past few years to demonstrate consistent income.
3. Details of Other Debts
Lenders will also examine your existing financial obligations. Holding a car loan or student debt won’t automatically disqualify you, but lenders will want to know how these debts might impact your ability to manage a mortgage.
A strong credit score can work in your favour, helping you secure both approval and more favourable loan terms. It’s a good idea to review your credit report in advance to catch any errors or issues that could affect your application.
4. Proof of Down Payment Funds
In addition to monthly mortgage payments, lenders want assurance that you can cover the upfront costs of buying a home—including the down payment and closing fees.
The amount you put down affects your mortgage in several ways. A larger down payment can reduce your loan amount, potentially lower your interest rate, and help you avoid mortgage default insurance, which is mandatory for down payments under 20% of the home’s value.
You can verify your down payment with bank statements, investment account balances, or documentation showing the sale of a previous home. First-time buyers in Canada may also use the RRSP Home Buyers’ Plan to fund their down payment.
5. Information About the Property
Lastly, lenders need specifics about the home you intend to buy. This includes the real estate listing and a signed purchase and sale agreement.
A property appraisal may also be required. This step ensures the home is valued accurately, helping both you and the lender avoid overpaying.
While collecting mortgage paperwork can seem daunting, being organized from the start can make the home-buying process smoother. Use this checklist to start gathering your documents and move one step closer to unlocking the door to your new home.
WhatsApp
Instagram
Threads
