Can I Get a Mortgage on Maternity Leave?
Getting a Mortgage on Maternity Leave: What You Need to Know
Is it possible to get a mortgage on maternity leave? The answer is yes, it is possible to get a mortgage while on maternity leave. Parental leave, including maternity leave, is protected in Canada, so no lender should refuse your mortgage if you’re on maternity leave.
Because your income is likely reduced while you're on maternity leave, most lenders will use your regular, non-maternity leave income when approving your mortgage. You’ll just need to show proof of your return-to-work date and your full-time salary.
Just like a regular mortgage, there are steps you can take to increase your chances of getting approved for a mortgage while on maternity leave. These include having a good credit score, a low debt-to-income ratio, and providing documentation of your income and job security.
It's also important to shop around and compare lenders to find one that is willing to work with you and your unique situation.
Understanding Maternity Leave
When you're expecting a child, you may be wondering how maternity leave or parental leave will affect your ability to get a mortgage. It's important to understand the basics of maternity leave before you start the mortgage application process.
What Is Maternity Leave?
Maternity leave, also known as parental leave, is a period of time that a new parent takes off from work after giving birth, usually 6-62 weeks. It can also apply to fathers, non-birth parents, adoptive parents, and miscarriages within 16 weeks of the due date.
Most maternity leaves are unpaid, but some employers offer paid maternity leave as part of their benefits package.
Because most people’s income changes while on leave, mortgage lenders will look at your regular income when they approve you for a mortgage. So you should be approved for the same amount you would be if you were still working.
Mortgage Lending Criteria
While you will still be able to get a mortgage, lenders want to see evidence of your return-to-work date and income.
Lenders will also consider several other things to determine whether you are eligible for a mortgage and how much you can borrow. Here are some of the key factors that lenders will look at:
- Income
- Employment status
- Credit score
- Debt
Even if you plan on returning to work and have guaranteed income, there are other factors mortgage lenders look at. Having a strong employment history, a high credit score, and little to no debt, can help you get a mortgage in any circumstance, including while on maternity leave.
Applying for a mortgage with someone, like a spouse, or a cosigner, can also increase your chances of getting a mortgage.
How to Get a Mortgage on Maternity Leave
Using Return-to-Work Income
If you have a return-to-work date and guaranteed income, you can use it to apply for a mortgage.
However, lenders may require additional documentation to prove that you will continue to receive income after your maternity leave ends. This may include a letter from your employer stating your return date and salary, or a copy of your employment contract.
Using a Spouse's Income
If you are not planning on returning to work or don’t make enough to get the mortgage you want, you may be able to use your spouse's income to apply for a mortgage.
However, your spouse will need to meet the lender's income and credit requirements on their own.
Keep in mind that if you are applying for a joint mortgage with your spouse, both your credit scores and incomes will be taken into account.
This means that if your spouse has a low credit score, insufficient income, or high debt, it could negatively impact your chances of getting approved for a mortgage.
Using a Co-Signer
Similar to applying with a spouse, applying with a co-signer means you apply for a mortgage with someone. Often times this is a parent or parents, but it could be anyone in good financial standing.
By using a co-signer, it shows the mortgage lender that someone can pay the mortgage if you can’t. It can help you get approved for a mortgage or approved for a higher amount.
Other Tips for Getting Approved for a Mortgage on Maternity Leave
Preparing for the Mortgage Application Process
Before applying for a mortgage, it's important to prepare yourself for the process. This includes gathering all necessary documentation, such as proof of income and employment, bank statements, and tax returns.
If you’re on maternity leave, make sure you have documentation that clearly states:
- When you’re returning to work
- What your salary will be when you return to work
When preparing for the mortgage application process, it's also important to be honest and upfront about your maternity leave. Make sure to provide your lender with a clear timeline of when you plan to return to work and any other details they ask for.
Working with a Mortgage Broker
Working with a mortgage broker can be a great way to find the best mortgage options for your situation. A broker can help you navigate the application process, provide guidance on documentation requirements, and help you find lenders that are more likely to approve your mortgage application.
Remember, getting a mortgage on maternity leave may be more challenging, but it is not impossible. By planning ahead and being prepared, you can increase your chances of getting approved for a mortgage that meets your needs.
For help finding the right mortgage for you on maternity or parental leave, contact the mortgage brokers at Spire Mortgage.
