What is the most important document for a mortgage application?
By Jackie Bowen, Mortgage Broker – Primex Mortgages
Notice of Assessments (NOA’s) from Revenue Canada are the single most important document required by lenders when applying for a mortgage especially if you are self employed or if need to include overtime and/or bonuses for income qualification purposes.
NOA’s are annual statements sent by Revenue Canada to you once you have filed your tax return detailing the amount of income tax you owe. It includes the amount of income earned, tax refund, tax credit and tax already paid.
While it is important to keep all NOA’s received from Revenue Canada, it is important to keep on file your (2) most recent years when qualifying for a mortgage.
Self employed borrowers:
For self employed clients using stated income programs, the lender looks to ensure no taxes are owed to Revenue Canada. Typically, only the two most recent years NOA’s will be required.
If you are self employed and income qualifying, lenders will look at both the average of Line 150 of your NOA’s for the last 2 years and that you owe no tax to Revenue Canada. Self employed borrowers that are income qualifying are also eligible to gross up their Line 150 by 15%.
If you are employed and get paid salary or hourly and you want to include additional income such as overtime, bonuses or even part time income, lenders will require your (2) most recent years of NOA’s. Your income will also be qualified using a (2) year average.
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