Can you qualify for a mortgage on maternity leave?

Are you able to buy a house if you are on maternity leave? Depending on your circumstances, you may find yourself asking this question as a parent and future home owner. Qualifying for a mortgage on maternity leave is a common uncertainty in today’s market, but we are here to make it simple. Here are the basic points to know!

Is it possible to get a mortgage on maternity leave?

Right off the bat, you want to know if securing a mortgage while on maternity leave is even an option. The good news is it is definitely possible! Even though your household income is likely lower during this period of your life, buying a home is still within reach. In Canada, there are laws protecting those on leave, which don’t allow lenders to automatically toss your application out the window if you are currently off work. You must be given the chance to prove your creditworthiness and ability to maintain a mortgage, just like every other applicant. The key thing to note is that although you don’t need to be working your full-time hours, you do still need to provide proof of credibility to lenders. This means getting a credit report ready! Ideally, your credit score should fall at 640 or higher. The higher your score, the higher your chances of securing a mortgage. Try to pay off any debts and limit your spending, if necessary, before entering the market. This will help boost your credit score, even if you currently don’t have a regular income source.

Is the process any different?

The process of getting a mortgage on maternity leave isn’t that much different from that of a typical borrower. Lenders will still examine your income, debts, and credit, as well as the appraisal value of the home you want to buy. The only major difference is your income will be much lower. While you may still earn income from your job while you are on leave, the amount will undoubtedly be smaller. As a result, you will need to try to boost your application as much as possible, as mentioned above. In addition, you may have a spouse or partner whose income can support your application. You can also consider aiming for a less expensive home that requires a smaller down payment, which may be easier for a lender to approve. Otherwise, you could be looking at higher interest rates in exchange for securing a mortgage. While the process of getting the mortgage itself is not much different, the results might be.

How can your employer help?

You might be wondering whether your employer can do anything to provide your lender some reassurance about your job status. In many cases, the answer is yes! If you have a guaranteed position to return to at the end of your leave, lenders will take this into account. Your employer can provide you with a letter stating your position, salary, start date, return date, and company name. Upon receiving this, your lender may be able to consider your income level to be that of your regular salary, and not your current maternity benefits. Of course, this will make the process much easier and more accessible to you.

If you are self-employed or work on commission, this might not be an option for you. In this case, you should prepare T4s and Notice of Assessments over a period of a few years. This information will help your lender get an idea of your typical income range, which gives them a clearer idea of your ability to pay a mortgage.

While getting a mortgage on maternity leave can be a slightly different and more stressful process, one thing that never changes is the importance of using a mortgage broker. Your situation will be unique, and you need a professional on your team who can tailor their services to you. Depending on your circumstances, the lender, product, and rate you can secure will vary. We’re here to help you get the financing you deserve!

If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.