THIS vs THAT 11 | Verified Income vs Stated Income
Michael Hallett • September 28, 2018
Income is income. Yes and No. The underwriters that work for the lenders are mandated to constantly assess the risk level of each client. They are tasked with determining the probability of the borrower repaying the mortgage amount on-time, plain and simple. As income earners there are many ways to structure how we are paid.
In the mortgage industry there are basically two different classifications for earning an income; employee or employer/self-employed.
For an employee we consider one’s gross income as verified income. This is the total income reported to Canada Revenue Agency (CRA) from January 1st to December 31st in any given year. The income amount is documented on T1 Generals, T4s and Notice of Assessments, it’s referenced LINE 150. We utilize this line item amount to qualify the mortgage amount. There isn’t anything we can change.
Self-employed income earners file the same taxation documents with CRA. But as a self-employed person there are tax rules that allow business owners to reduce their reported income through write-offs (for further details please consult your certified accountant). When a self-employed mortgage consumer needs to qualify for financing we utilize the same LINE 150 income. Depending on how their accountant has structured their income will determine their borrowing power through the verified income process. If the gross annual income is too low to qualify for the required amount, we can proceed with a process called stated income. This takes a further examination of their financial documents to determine if any of the write-offs can be added back to the total income.
Going with a stated income mortgage product will end up costing a bit more, but the borrower can qualify for a higher mortgage amount. This may be the difference between ultimately buying or refinancing into exactly what they want.
As mortgage consumers the lenders require us to provide documentation to upon borrowing money for purchasing or re-financing real estate. The lists are slightly different depending on one’s income classification.
Employee:
Letter of employment
Most recent pay stub
Most recent 2 years of T4s
Self-employed:
Most recent 2 years of Notice of Assessments (issued by CRA)
Most recent 2 years of T1 Generals along with Statement of Business Activities
Most recent 2 years of accountant prepared financial statements, if incorporated
*The combination of documents can vary from lender to lender.
If you have any questions on how to structure your income to plan for a future real estate purchase or refinancing, please do not hesitate to contact me.
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One of the most common questions, “how long does it take to get pre-qualified?” My response, “how fast can you provide the information I need.”
Playing in the forest today. Always fun exploring. #mountainbikingmortgagebroker
Mortgage Brokering meets mountain biking and craft beer. A couple months ago I set for a bike ride with the intention of answering few mortgage related questions, mission accomplished. Any good bike ride pairs nicely with a tasty beer which we enjoyed @parksidebrewery. Hope you see the passion I have for brokering, biking and beer. @torcabikes #mountainbikingmortgagebroker
My thighs were cold all day, it was ‘that’ deep. I was choking on snow all day.
The weather report was 36 cm of new snow, it was more like 45-50 cm of light deep powder. Insane day of skiing.
Spotted a ski-bunny today @kirstinjhallett so I trapped ‘er. 📸 credit @troy.hartley
Aidan leading the pack up the Lemming Line in seek of fine fresh powder.
Beautiful British Columbia! A cold winter day at its finest.
Aidan and I braved the -19C temperature and windy conditions for the boot to knee deep turns...it was a no-brainer.
Happy Holidays. Seasons Greetings. Merry Christmas. All the best from Kirstin, Aidan and Michael. Enjoy your family time.
Snow report for today was boot to knee deep in places. Simply an awesome day rippin’ with the kids, I had to show them that I still got it. 📷 credit @jhalskiing
It’s that time of year for my annual post, the Christmas Tree pilgrimage. The only that changes year after year is that Aidan gets taller! Not to worry though, the Canadian tuxedo jacket remains the same. HAPPY HOLIDAYS everyone. Much love to all.
Fresh wood in the morning...where is this treasure trail going to take me?
TEASER alert...at thats what I think they call it in the business. Years ago a wrote a blog called BEERS BIKES AND MORTGAGES. I some how (in my head) blended all 3 topics into 1 blog. Simply put, I enjoy aspects of all 3 with each of them providing something different. I re-united with the talented Regan Payne on a project that I think will shed a bit more light on who I am and what I do. #craftbeer #mountainbike #mortgagebrokerbc #dlccanadainc
Here is to looking forward past injuries, feels good to be riding again. It was a 18 week grind!
Extreme tubing, watch until the end. Aidan manages to hold on.
Lake life as a passenger is a good life. Captain @kirstinjhallett . #woodlake #kalamakalake
Yet another reason why our license plates say BEAUTIFUL BRITISH COLUMBIA on them. An evening enjoy the view on Pitt Lake.
Surfing! Don’t need functioning hands to surf. It was nice to do something active. Thanks @jordspring #sakinaw
Good thing there were a few other vehicles with winches on the front.
He was OK, thumbs up. The roll cage and 5-point seat belt did its job.
My sons intro to operating a side-by-side on his own. Watch to the end.
The Lookout over looking Tulameen BC. Took some 4x4ing to get there, but we did it.
The day started out great. Exploring the back country roads of BC, Stave Lake area. Views of Alouette Lake in the background
Impromptu ride on Burke. I dreamed of the day Aidan would ask to go for a ride...today was the day, “Dad do you want to go for a ride?” Heck ya, let’s go! This was a fun feature at the end.
An afternoon of exploring the Stave Lake zone. Planning to return soon once the snow melts to get some vertical.
Found a fun little gap-drop to session. I have my moments when I like my tires leaving the ground.
This would have been a fun stunt once upon a time!
And so it begins...another tool for adventuring! So different so fun!
You know it’s steep when your hand is touching the snow, high risk high reward.
The snow report suggested 8 cm had fallen, it was more like 25-30 cm.
Now that he has a dirt bike the hunt is on for me too. This is the first ride trying to figure out the timing of the throttle, clutch and brake...second ride was even better.
Exploring Pinecone Burke Provincial Park a month ago with @troy.hartley. Standing in the site of the old ski lodge.
A well weathered tree coming through yet another winter with Yak Peak 2,039 metres in the background. Putting my limited artist talent to the test, these iPhones and filters making anybody a photographer.
A successful reconnaissance mission we crossed Falls Lake, ski toured up towards Zopkios Peak 1921 m. It was a exceptional picnic destination. The skiing was shit!
Who’s is going to go first?...I’ll go if you don’t! No friends on a powder day! @j_penner70 📷 @sheascottcolpitts
An epic day. Everything was perfect. Depth of Snow. Visibility. Temperature. Even the company.
In the green room today on the best coast amidst winter...not a bad place. 📷 @dgm_images
I saw this hat on Instagram, that very moment I knew I needed it. As a BC boy born and bred The Outdoorsman hat needed to be added to my collection. As someone who loves BC and most things outdoor, I’m now glad I have a cool hat to wear and fly the flag of BEAUTIFUL BRITISH COLUMBIA. It will be in my bag for all post-exploration celebratory cold pints. If you want to check them out or add one to your collection go to @nineoclockgun ...and yes my facial hair matches the hat as well.
When two of your ski buddies are 13 years old, you know you’re raising rippers. @paigerriley
My ski buddy getting untracked turns. It was knee to thigh deep all day for him, only shin to knee for me.
We went for a snowshoe this afternoon, but we probably should have considered taking our flippers instead. Our timing was off by one day.
From sea to snow capped peaks, it’s obvious why Vancouver and BC continue to be one of the best places to live. It’s engraved on our license plates, BEAUTIFUL BRITISH COLUMBIA.
Ancient blue glacier ice craving out deep valleys. It’s pretty cool standing underneath one...photo credit @dustanwoodhouse
This is a great start to the day!
No better way to share the great outdoors than with friends. @troy.hartley @mike_ilic711 @j_penner70
The ski out back to the truck was more of an adventure than we bargained for...
Exploring the BC backcountry, it did not disappoint...it never really does.
Thank god we are all narcissistic and have the ability to take pictures of ourselves 🤪. This is taken pre-turkey dinner, I’m sure we will all be back in our comfy clothes soon! Merry Christmas!
The crew shredding some turns , it was a 23,000 vertical foot kind of day.
Happy belated Hanukah, Merry Christmas and Happy Holidays to all. Be sure to enjoy the festivities.
Top of Swan Falls. I’ve said it many times before and I will say it again, our license plates say it all. BEAUTIFUL BRITISH COLUMBIA. #gooutside
The coveted annual mission to get our Xmas tree, with of course my Canadian tuxedo jacket on.
Yet another reason (unlimited really...) of why the Left Coast is the best coast! @tami0777
Moss, a non-vascular plant and Mother Nature’s carpet reclaiming the forest.
Capitalizing on a break in the wet coast rain storms.
Just follow the brown line switchbacking through Mother Nature. She’s so damn beautiful!
Day 3 for Black Magic was a bit snowier than initially expected. Thanks to the person who took a few minutes to build a snow creature.
Beauty day for a ride! I should have considered bringing my touring skis.
The West Coast is the Best Coast. #nofliter at sunset.
This was Day 1 on my @yt_industries Capra Pro 29. I thought the last bike was the best, it was a Capra Pro 27. I never thought the small differences in geometry and wheel size would have such a huge positive impact on my riding. Boy was I wrong! Best bike ever!
Oh boy! See a toy...buy a toy! New steed! YT Capra Pro 29 hitting the trails soon.
A tasty beverage while on the water yesterday from @backcountrybrewr and @backcountrybrewing
Epic ride with boys yesterday. Into the Mystic, Last Call, Happy Hour and Lord of the Squirrels. 5 hrs 15 mins, 31 km and 1,397 vertical metres.
Whistler slick rock is my favourite.
Wood to wood gap in Whistler.
Passing underneath the Ironworkers Memorial Bridge on the return journey of dinner-by-boat. No filter.
And now the training starts for Paris 2024 summer olympics.
Archery target: before, during and finished.
Aidan’s first day in the Whistler Bike Park, he had a blast and we rode trails I didn’t think we’d ride 😳. I’m sure we’ll return soon enough.
A rare sighting at the Whistler Bike Park, it’s been at least 10 years.
When the opportunity presented itself, I couldn’t pass up one of my favourite slick rock rolls.
Pre-dinner antics...it’s totally safe!
Aidan is captaining the watercraft, mom in just the passenger. Kalamaka Lake.
#Drewmboat camo @parksidebrewery
Safety first when roasting marshmallows.
Great place to press snooze for 20 minutes. Chez Labowka.
Raw kale. Just not the same as a kale caesar salad.
Saratoga Beach fire.
Canadian tuxedo.
Happy Canada 🇨🇦 Day to everyone near and far. I hope it’s a kick ass day. Play safe.
The @yellowdogbeer squirrel chaser or otherwise known as the chew toy was a hit with me and Moka Labowka
It’s always fun to start the trail with a repel. #mountainbike #climbing
It only took me a half dozen or so tries but I managed to cross the halfway line. This old guy still has it! Fun times.
Follow your path, at times you never know where it’s going to take you. Trust the outcome. Having fun in The Green Room.
This old guy was collecting a few air miles today.
Going vertical. #slickrock
I have a ski buddy, now it’s time to train a biking buddy.
I’m really looking forward to riding this gem once it re-opens. #burkeinmybackyard
Enjoying a distanced beverage with @senorwad @yellowdogbeer
Aidan and a couple buddies are now members at the Pitt Meadows Golf Club. @greggmcnally @genevemcnally @wendy22boddy @jaradboddy @kirstinjhallett
Raw and unedited. Old school skinny with a drop at the end.
I’m still HOME ALONE! Looking forward to the day when I’m able to have some friends over to share these @backcountrybrewing Widowmaker IPAs. #backcountryphotocontest
Zoa Peak, Coquihalla summit 1,500 vertical metres of skiing.
Distancing myself from the real world!
The dry land version of the @andrei_svechnikov37 lacrosse-style goal executed Aidan.
Skis or bike? Bike. The snow won’t stop me.
Does anybody need or want any firewood? It’s free...you come pick it up.
I needed to buck up the trees they fell in the last wind storm. Task complete.
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Buying a home is one of the biggest financial commitments you’ll ever make. That’s why lenders want to be sure you can handle your mortgage payments—not just today, but also if interest rates rise in the future. This is where the mortgage stress test comes in. Many Canadians hear the term but aren’t entirely sure what it means or how it affects them. Let’s break it down in plain language. What Is the Mortgage Stress Test? The stress test is a rule introduced by the federal government that requires all mortgage applicants to qualify at a higher rate than the one they’ll actually pay. Currently, you must qualify at the greater of your contract rate + 2% or the benchmark qualifying rate (set by the Office of the Superintendent of Financial Institutions). For example: If your lender offers you a 5-year fixed mortgage at 5.25%, you must show you could still afford the payments at 7.25% . Even if rates don’t rise that high, the stress test ensures you won’t be overextended if they do. Why Does It Matter? The stress test protects both borrowers and lenders by: Preventing over-borrowing : It ensures you don’t take on more debt than you can realistically handle. Preparing for rate hikes : With interest rates fluctuating, it’s a safeguard against sudden increases. Strengthening financial stability : It lowers the risk of defaults, protecting the housing market as a whole. While it can sometimes feel like a barrier—reducing the amount you qualify for—it’s ultimately designed to keep you from becoming “house poor.” How Does It Impact Buyers? The stress test can significantly affect your homebuying budget. For example, without it, you might qualify for a $600,000 mortgage, but with the stress test applied, you may only qualify for $500,000. That doesn’t mean your dream of homeownership is out of reach—it just means you may need to adjust expectations or explore other strategies, such as: Increasing your down payment Paying down existing debts Considering alternative lenders who may have different qualification standards Why Work With a Mortgage Professional? Every lender applies the stress test, but not every lender views your application the same way. An independent mortgage professional can: Shop multiple lenders to find the best fit Run affordability scenarios at different rates Help you understand how much house you can truly afford—without stretching your finances too thin The Bottom Line The mortgage stress test isn’t meant to stop you from buying a home—it’s there to protect you from financial strain down the road. By understanding how it works and planning ahead, you can make smarter choices and buy with confidence. If you’re thinking about purchasing a home, refinancing, or simply want to know how the stress test affects your options, connect with us today. We’ll help you stress-test your budget and find the mortgage solution that works best for you.
The Bank of Canada announced today that it is maintaining its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. For Canadian homeowners, buyers, and anyone with a mortgage on the horizon — here's what you need to know.
