Buying a home is a big decision, and it can feel even more complicated when your household income is temporarily changing. If you’re on maternity or parental leave, or you’re preparing to return to work, you may be wondering whether you can qualify for a mortgage.
The good news is that being on parental leave doesn’t automatically mean you can’t get a mortgage. Your options will depend on your employment situation, household finances, and the lender’s requirements. With the right preparation, you may be able to move forward with your home-buying plans sooner than you think.
Here’s what you need to know about getting a mortgage in Canada while on parental leave or returning to work.
Can You Qualify for a Mortgage While on Parental Leave?
Yes, it may be possible to qualify for a mortgage while you’re on maternity or parental leave. Lenders assess your ability to repay the mortgage, and some may consider your regular employment income even while you’re temporarily receiving reduced income or Employment Insurance (EI) benefits.
However, lender policies vary. Some may require additional documentation to confirm your employment status, salary, and expected return-to-work date. Others may assess your current income differently, depending on your circumstances.
This is where working with a mortgage broker can help. A broker can review your situation and help identify lenders whose policies may suit your needs.
How Does Parental Leave Affect Mortgage Qualification?
When assessing a mortgage application, lenders generally consider your income, debts, credit history, down payment, and housing expenses. Parental leave can make the income portion of that assessment a little more complicated.
Here are a few factors that may affect your application.
1. Your Employment Status
If you have a permanent position and are taking a temporary leave, your ongoing employment may be an important part of your application.
A lender may want to confirm that you remain employed and have a position to return to. If you’re planning to return to the same employer, your expected return date and regular salary may help support your application, depending on the lender’s policies.
If you’re self-employed, on a contract, or planning to change jobs after your leave, the assessment may be different.
2. Your Current Income
During parental leave, you may receive EI benefits rather than your usual salary. Because these benefits are typically lower than regular employment income, qualifying based solely on your current income could affect how much you can borrow. Not sure how much you’ll receive during your leave? The Government of Canada explains how EI maternity and parental benefits are calculated, including the difference between standard and extended benefits.
Some lenders may be able to consider your regular employment income if you meet their requirements and provide suitable documentation. Others may use a different approach.
If you have a partner whose income will also be included in the application, their earnings may help support your overall household qualification.
3. Your Return-to-Work Date
Your expected return-to-work date can be particularly important if you’re applying for a mortgage before your regular salary resumes.
For example, a lender may request an employment letter confirming your position, salary, and anticipated return date. The closer you are to returning, the more straightforward it may be to document your situation, although approval requirements differ between lenders.
If you’re returning part-time or changing your hours, be prepared to explain how your income will look going forward.
What If You’re Returning to Work After Parental Leave?
If you’re planning to return to work soon, you may have more options than you realize.
You don’t necessarily need to wait until you’ve received several regular paycheques before exploring mortgage financing. Depending on the lender, your employment documentation and confirmed return-to-work details may be enough to begin assessing your application.
That said, some lenders may want to see proof that you’ve resumed employment, such as recent pay stubs. Others may have specific requirements around your return date or income verification.
If you’ve already returned to work, gathering your latest pay stubs and an updated employment letter can help make the process smoother.
The key is to find out what your lender will require before you start making firm plans to purchase a home.
What Documents Might You Need?
Preparing your paperwork early can help you understand your borrowing options and avoid unnecessary delays.
Depending on your situation and the lender, you may be asked for:
- An employment letter: Confirming your job title, salary, employment status, and expected return-to-work date.
- Recent pay stubs: If you’ve already returned to work.
- EI benefit statements: To document the income you’re receiving during your leave.
- Recent tax documents: Such as T4 slips or Notices of Assessment, if requested.
- Proof of down payment: Showing where your down payment funds are coming from.
- Details of your debts and expenses: Including credit cards, car loans, student loans, and other regular payments.
Not every lender will request all of these documents, and additional paperwork may be required depending on your employment and income.
How Can You Prepare Before Applying?
If you’re thinking about buying a home while on parental leave or shortly after returning to work, a little planning can go a long way.
Review your household budget. Consider your current income, childcare costs, and other expenses. Make sure your future mortgage payment would be manageable alongside your family’s day-to-day needs.
Check your credit. Review your credit report for errors and make sure you’re keeping up with your payments. Your credit history is one of the factors lenders consider.
Understand your down payment. Determine how much you’ve saved and remember to budget for closing costs, moving expenses, and an emergency fund.
Avoid taking on unnecessary debt. New car payments, large credit card balances, or other loans can affect how much you qualify to borrow.
Speak with a mortgage broker early. You don’t have to wait until you’re ready to make an offer. Discussing your plans ahead of time can help you understand what documentation you’ll need, which lenders may be suitable, and whether your timing makes sense.
Should You Wait Until You’re Back at Work to Apply?
Not necessarily. Waiting until your regular income resumes may simplify some applications, but it isn’t always required.
If you find a home you’d like to buy, or you’re planning ahead for a purchase in the coming months, it can be worth exploring your options while you’re still on leave.
On the other hand, if your income will change significantly when you return to work, or you’ll be taking on new childcare expenses, waiting may give you a clearer picture of your long-term budget.
The right timing depends on your finances, employment arrangements, and the lender’s requirements. Getting advice early can help you make an informed decision without putting unnecessary pressure on your family.
Let’s Talk About Your Mortgage Options
Returning to work or taking parental leave doesn’t have to put your homeownership plans on hold. Although the mortgage qualification process can look a little different during this stage of life, there may be options available to you.
A mortgage broker can help you understand how lenders may assess your income, what documentation you’ll need, and how much you may be able to borrow based on your circumstances.
Thinking about buying a home while on parental leave or returning to work? Reach out to discuss your situation and explore your mortgage options.