MORTGAGE - Do I Need an Income to get a Mortgage

Yes, you need some type of income to get a mortgage. The calculation for debt servicing is your total debt payments divided by your gross income. Without an income this formula does not work, and you cannot qualify for a mortgage.

Employment income is the most common and you can use the gross annual amount. Other types of income include rental income, investment income (dividends and interest), alimony, pensions, child support and other types of income. There are many restrictions on how much of your income can be used for different types of income. For example, self-employed income you need to use a two-year average of your most recent tax years to calculate your usable income to qualify.

It is also important to note that your employment income must be permanent. No temporary assignments will be accepted by a lender.

Some people think that you can use your home's equity to qualify for a mortgage, but your property's equity is not considered liquid nor income. Lenders do not accept your property's equity directly to qualify for a mortgage. If you have a lot of equity then there are equity programs that allow you to use a higher debt servicing ratio, but you still need an income to calculate the debt servicing ratio. The equity in these equity programs is not used directly but only allows a higher debt servicing calculation.

It is best to talk with a mortgage professional to ensure that your income will be accepted by a lender.

Contact Us
For more information on qualifying income, contact your local Ajax Mortgage Broker, Sean Stewart at 905-427-9596 or sean@seanastewart.com