(February 11, 2024)
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If you’re navigating the journey towards homeownership and have the unique joy of raising a family, this is a must-read. The path to securing a mortgage takes a distinctive turn when you have little ones in the picture. Discover the built-in child-related qualification boosters designed to tackle and diminish the financial challenges associated with the broader expense load of families. From harnessing government support like Canada Child Benefits to collecting child support payments, navigating maternity leave intricacies, and considering the impact of youth employment – this blog is your indispensable guide to not just a home but a stable and thriving future for your family.
From early childhood to the age of majority, here are the key child-related mortgage qualification boosters:
MATERNAL/PARENTAL LEAVE:
In Canada, the maternity leave guidelines offer flexibility and support for new parents. Both women and men are entitled to take time off from work to care for their newborn child, a provision commonly referred to as maternity or paternity leave. During this time, the government provides financial assistance through Employment Insurance, granting a portion of the individual’s average weekly earnings. There are two primary options available to parents: a standard 12-month maternity leave, offering 55% of average weekly earnings, or an extended 18-month leave, providing 33% of average weekly earnings. Additionally, some employers offer a top-up, supplementing the government’s contribution up to 100% of the individual’s salary.
When it comes to mortgage qualification during maternity or paternity leave, lenders will allow up to 100% of your workplace income, provided you can obtain a letter of employment from your employer indicating the expected return to work date. However, if the return is projected to be greater than 12 months, lenders will scale back the qualifying income to 60% of the base salary as stated on the return to work letter.
CHILD SUPPORT PAYMENTS:
Child support payments are considered eligible qualifying income and can often be a game-changer when it comes to mortgage qualification. For applicants receiving child support, verification documents are required and may include the most recent Notice of Assessment or T1 General/Tax Return, supported by a separation agreement or court order. Alternatively, a two-month history of bank statements illustrating regular support payments, along with a copy of the formal separation agreement or court order, may also suffice. These documents are essential for demonstrating the stability and reliability of the income stream, but also for verifying that the child support payment is expected to continue for the foreseeable future. Additionally, there’s a stipulation that the child-support payment cannot exceed 50% of the overall eligible employment income of the application (of all applicants). Conversely, for applicants who are obligated to pay child support rather than receiving it, the entire payment is factored in as part of their liabilities. Consequently, the total mortgage qualification amount decreases proportionately.
CANADA CHILD BENEFIT PAYMENTS:
The Canada Child Benefit (CCB) is a financial support program provided by the Government of Canada to assist families with the cost of raising children. It is designed to provide monthly payments to eligible families to help with child-rearing expenses.
In terms of mortgage qualification, lenders account for the CCB in determining eligible income subject to the following conditions:
Age Limit: While the CCB payments are available for children until the age of 17, for mortgage qualification purposes, lenders only recognize payments for children up to the age of 15 at the time the mortgage transaction completes.
Full Eligibility: One hundred percent of the CCB payment is typically eligible for mortgage qualification purposes. This means that lenders consider the entire amount of the benefit when assessing the borrower’s income level.
Income Limit: Similar to child support payments, there is a cap on the total eligible CCB benefit that can be included in mortgage qualification calculations. The total eligible benefit cannot exceed 50% of the total application income.
WHEN CAN MY CHILD QUALIFY FOR A MORTGAGE?
The minimum age requirement to become an eligible applicant for mortgage qualification purposes is determined by each province’s age of majority laws. The age of majority is 18 in the following six provinces: Alberta, Manitoba, Ontario, Prince Edward Island, Quebec, and Saskatchewan. The age of majority is 19 in the remaining four provinces and the three territories: British Columbia, New Brunswick, Newfoundland, Northwest Territories, Nova Scotia, Nunavut, and Yukon.
Any questions on any of the above? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.
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