What income amount do you use to calculate debt ratios?

Do you want to know what size of mortgage you qualify for but are unsure of what income to use? When calculating debt ratios, it is very important to know how much to use as your qualifying income.

Here are a few basic guidelines:

Lenders will use the average of your last 2 year's Gross income if:
·         your income fluctuates
·         you receive bonuses or overtime
·         you are part time (unless you are guaranteed a certain number of hours)
·         you are self-employed
·         you are paid on commission
·         you are paid as a sub-contractor
·         you are using pension income
·         you are using investment income

This amount is taken from your Line 150 on your T4's and /or Notice of Assessments.

If you have not been at your current job for more than 2 years, they may accept a 2 year history if your employment was in the same industry.

They will use your Gross annual wage if:
·         you are hourly and guaranteed full time hours
·         are on a salary

This amount is taken from your job letter along with a recent paystub. It is important to note that they will check your year to date to make sure that it is a true reflection of your income.

Every situation is unique so it important to speak to a Mortgage Broker to confirm exactly what amount will be used by the lenders.

If you have any questions about debt servicing ratios or qualifying income, please feel free to contact me today.

www.christinebuemann.com