Your Income and Your Mortgage: New Jobs, Contracts, Parental Leave and Pensions

Lenders don't just ask how much you earn: they ask how you earn it, how long you have earned it and whether it will continue. Here is how lenders and mortgage insurers count each kind of income, from bonuses and contracts to parental leave and pensions, so you can gather the right documents before you apply.

The short version

How lenders check your income

Banks and other federally regulated lenders follow OSFI's Guideline B-20, which expects them to verify your employment status and income history with a source that is independent and difficult to falsify, and to check that it doesn't contradict the rest of your application. The Financial Consumer Agency of Canada says you may need to show:

• Your pay. Your current salary or hourly rate, for example with a recent pay stub.
• Your job. Your position and how long you have been with your employer.
• Your records. CIBC, for example, also lists a T4 slip, your T1 General and Notice of Assessment, and recent pay deposits in your bank account.

With less than 20% down, you will typically need mortgage default insurance from CMHC, Sagen or Canada Guaranty, and the insurer's rules then apply too. Sagen, for example, recommends that lenders confirm your employment verbally, so your lender may call your employer.

Salaried and hourly jobs, new jobs and probation

Steady pay is the simplest case. Sagen treats full-time wages, and part-time pay with guaranteed hours, as fixed income. A current job letter with a recent pay stub, or with two months of pay deposits, is generally enough; otherwise the lender adds your latest T4, Notice of Assessment or last year-end pay stub.

• Hours that aren't guaranteed. Casual or part-time pay without guaranteed hours is treated as variable income, so the lender looks at a two-year history.
• Probation. Sagen leaves probation to each lender's own policy, with due diligence based on your work history and the type of job. If you have just started a job, or are about to, ask how the lender will treat it before you apply.
• Changing jobs mid-purchase. A pre-approval doesn't guarantee your mortgage, so talk to your lender before you change jobs between pre-approval and completion.

Overtime, bonuses and commission

Sagen lists overtime, bonuses, tips and commission as variable income. The lender needs at least a two-year history, usually from T4s, Notices of Assessment or year-end pay stubs, plus a current job letter or pay stub. Sagen then counts the lesser of last year's income or the two-year average, unless your income has risen every year for at least four years, when the latest year may be used. For example:

• Falling overtime. Your salary is $70,000, and your overtime was $10,000 in 2024 and $6,000 in 2025. The average is $8,000, but last year was lower, so Sagen's rule counts $6,000, for $76,000 in all.
• Rising overtime. Reverse the years, $6,000 in 2024 and $10,000 in 2025, and the lesser amount is the $8,000 average, for $78,000.

Rules differ. Canada Guaranty's guidelines also use the lesser amount, but allow the two-year average when the most recent full year is within 20% of it. OSFI also expects lenders to normalize or discount income that is only temporarily high.

Contract and seasonal work

Contract income is also variable under Sagen's guidelines, so the same two-year history and averaging rule apply.

• Seasonal jobs. Seasonal income needs the same history. Sagen counts Employment Insurance for seasonal workers only if at least 70% of the income comes from the employer's pay and no more than 30% from EI. Apart from that and parental benefits, it doesn't count EI as income.
• Owning the business. If you own 25% or more of the business that pays you, Sagen considers you self-employed, which has its own rules. I explain them in Self-Employed? How to Get a Mortgage in Canada.

Parental leave

Being on maternity or parental leave doesn't have to mean qualifying on your EI benefits. Sagen's guidelines let lenders use 100% of your return-to-work income, regardless of your return date, if your employer confirms in writing the date you will return and your salary or income level.

• Why it matters. EI maternity and standard parental benefits pay 55% of your average insurable weekly earnings, up to $729 a week in 2026, and extended parental benefits pay 33%, up to $437 a week. At $729 a week, that is about $3,160 a month before tax, compared with $6,667 a month on an $80,000 salary.
• The letter. Ask your employer for a letter that states your position, your salary or hours and your return date. Sagen also accepts verbal confirmation from your employer as a secondary source.
• Policies vary. Canada Guaranty also allows 100% of your salary, with a letter giving your expected return date, position and salary, and lenders can add their own rules, so ask before you apply.
• Plan for the payments. Your mortgage payments may start while you are still on leave, so budget for them on your EI income.

Pensions and retirement income

Pension income counts. Sagen's guidelines ask for:

• CPP and OAS. One document, such as your latest Notice of Assessment, a T4A slip, a recent pension stub or an account statement showing a deposit.
• A workplace pension. Two documents, such as your Notice of Assessment, a T4A slip, a pension stub, three months of account statements or a letter from your former employer or the plan administrator.
• RRIF and investment income. Your latest investment statement plus two years of supporting documents, such as T4RIF or T5 slips. The income should be expected to continue based on the value of the assets.

If you would rather draw on the equity in a home you already own, see Reverse Mortgages and Home Equity in Retirement.

Support payments and other income

Sagen's guidelines also set rules for other income:

• Support you receive. Child or spousal support can count if a court order, separation agreement or divorce agreement sets it out and it will continue, with your Notice of Assessment or bank statements showing the payments. If support is more than half of your qualifying income, Sagen's own underwriters review the file.
• Support you pay. It counts as a debt in your total debt service ratio, at the monthly amount in your agreement. If you are dividing a home, see Separation and the Family Home.
• Canada Child Benefit. It can count if it will continue for at least three years after the mortgage funds and is no more than 30% of your qualifying income.
• Non-taxable income. Sagen allows it to be grossed up by 25%, or by 35% when it is over $30,000.
• Disability benefits. Long-term disability can count with a confirmation letter; short-term disability needs a letter from your employer confirming you will return to your job.
• Rent. 100% of the rent from the second unit of an owner-occupied two-unit home counts, and 50% of the gross rent on an owner-occupied home with three or four units. I cover rental income in Financing a Rental Property in BC.

Whatever counts then goes into your debt service ratios at the stress test rate, the greater of your contract rate plus 2% or 5.25%. For insured mortgages, CMHC caps the ratios at 39% and 44%, which I explain in How Much House Can You Afford?

Getting your file ready

• Collect two years. T4s, Notices of Assessment and year-end pay stubs for 2024 and 2025, plus a recent pay stub and a current job letter.
• Get it in writing. Return-to-work letters, support orders or agreements, and pension statements.
• Be exact. OSFI expects lenders to detect falsified income documents, and on insured mortgages, suspected fraud is reported to the insurer. Never let anyone adjust a letter or a pay stub.
• Ask early. If your income is complex, a mortgage professional can tell you how different lenders will count it. See Mortgage Broker or Bank?

Questions buyers often ask me

Can I get a mortgage while I'm on parental leave?

Often, yes. Sagen's and Canada Guaranty's guidelines let lenders use your full return-to-work income if your employer confirms your return date and salary in writing. Lenders can add their own rules, so ask before you apply.

Can I get a mortgage if I'm still on probation?

It depends on the lender. Sagen leaves probation to each lender's own policy, and lenders look at your work history and the type of job, so ask before you apply or change jobs.

How do lenders count bonuses and overtime?

As variable income, usually with at least a two-year history. Sagen counts the lesser of last year's amount or the two-year average, unless your income has risen every year for at least four years.

Does child support count as income for a mortgage?

It can, if a court order or written agreement sets it out, it will continue and you can show the payments arrive. Support you pay counts as a debt in your ratios.

Can I qualify for a mortgage on a pension?

Yes. CPP, OAS and workplace pensions count, with documents such as your Notice of Assessment, T4A slips, pension stubs or bank statements, and you still have to pass the stress test.

Getting ready to buy? Start with a mortgage pre-approval, read How Much House Can You Afford? or try my mortgage calculator.

This article is general information, not financial advice, and your lender and insurer make the final decision. The details come from OSFI, the Financial Consumer Agency of Canada, CMHC, Sagen, Canada Guaranty, the Government of Canada's EI pages and lenders' own websites, and were current at the time of writing. For one insurer's published rules, see Sagen's covenant underwriting guidelines.