Your main income source is the first thing lenders look at when sizing up your mortgage potential.
From salary to hourly wages, commissions and tips — here’s how lenders assess your job income when deciding how much mortgage you qualify for.
Mortgage lenders start with your primary source of income — your job — when deciding how much home you can afford.
Whether you're salaried, paid hourly, or earning through commissions and tips, your employment income is considered a 'traditional' source. And lenders want to see stability and proof of this income before moving on to other factors, such as your credit score and debt load.
The form your pay takes can change the way lenders count it.
The most straightforward way to qualify for a mortgage is with a steady salary. The length of time you've been with the same company, or in the same industry, may be noted as a way to demonstrate stability.
Variable income can still count. Most lenders will include these sources, though their criteria may differ — and they need to see history. Typically, commissions and tips fluctuate over months or years, which can make it more challenging to assess them as a stable flow of funds.
A lender may rely on an average over a particular range of time. The longer the history of tip or commission income that can be shown through tax records, the better. Tips must be declared on your tax returns to be considered for mortgage approval.
Different than commissions, overtime and bonuses are often left to the discretion of employers. Lenders may consider this source as part of your total income if you regularly receive it, and a consistent pattern can be demonstrated over a specific period.
Probationary income usually isn't counted until the period is complete, even if you've moved within the same industry.
However, if the period is complete, lenders may include your probationary income if your new job is within the same field, especially if it's permanent and full-time.
Lenders look for predictable income that will continue, even those that are variable, such as commission and tips. The stronger (and longer) the documentation, the stronger your mortgage application.
Common proof you may need to provide: Pay stubs, T4s, Notice of Assessments (NOA), employment letter, Record of Employment (ROE).
Non-employment sources, such as rental income, government benefits, support payments, and side hustle income, aren't considered traditional income — but they can still strengthen your application.
See how they're treated in our guide: Beyond Your Paycheque: Income That Lenders Accept
As a business owner, if you've paid yourself a salary, it can count as traditional income, provided you've declared it on at least two years of personal tax returns.
But lenders usually see self-employed income as more complex. They may review your full business financials, look for consistency year over year, and sometimes apply additional conditions like larger down payments or default insurance.
If you run your own business or freelance, lenders may handle your income differently than a standard job paycheque. Learn more about how the process works on our Mortgages for Self-Employed page.
How lenders calculate affordability can vary, but for the most part, they use two percentages based on your monthly income — your Gross Debt Service (GDS) and Total Debt Service (TDS).
Gross Debt Service (GDS) should be about 39% of your monthly household income. Add up your mortgage payments (principal plus interest), taxes and heating expenses (and half of monthly condominium fees, if applicable), then divide by your gross monthly household income.
Total Debt Service (TDS) shouldn't exceed 44% of your monthly household income. Take the housing costs from the above point and add any other debts, such as car payments, personal loans, and credit card payments, then divide by your gross monthly household income.
You may also need to qualify for your mortgage payment through the federal government stress-test requirement, which may lower the mortgage amount that you can apply for.
No matter what your income source is, our expert True North brokers know the rules and lenders and can find the right mortgage fit for your situation.
Plus, our volume discount means you'll get your best rate to help you save thousands, term after term.
Whether you need a fast pre-approval or are ready to be approved, we seamlessly guide you through your process — for a dream mortgage experience to go with your dream home.
Note: Please consult with a professional expert mortgage broker for the income source details and documents you need for your unique situation.
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