Mortgage qualification

Income analysis and verification

To assess the borrower’s capacity to repay, the lender needs to know the amount and source of his income. This can be very simple in the case of a salaried employee, but much more complex for a self-employed person, or for a borrower who earns a salary but also receives bonuses, commissions or a share of profits.

A lender normally requires certain documents to verify income. Lenders have different policies in this regard.

Types of qualifying income

Not all types of income are included in the assessment of the borrower’s capacity to repay. Therefore, the income analysis is not limited to determining the borrower’s total income, but also the stability of the income that will be used by the borrower to repay the mortgage and other debts, while meeting normal expenses.

As a general rule, all proof of income must be obtained in writing from the employer and supported by documentary evidence. Each lender has its own policies regarding verification of employment and income; clients should be aware of a lender’s policies before applying for a mortgage.