When applying for a mortgage in Canada, most people focus on the obvious: credit score and income. But mortgage lenders consider a wide range of lesser-known factors that can impact whether your application is approved—or denied. Understanding these hidden variables could make the difference between moving into your dream home or going back to the drawing board.
1. Your Job Type
Employment status plays a crucial role in mortgage approval. If you’re self-employed, working on contract, or receive variable commissions, you may face stricter lending criteria. Lenders want to see consistent, verifiable income. This means two years of tax returns, business financials, and bank statements. Even if your income is high, unpredictability can make some lenders cautious. Salaried employees often have an easier path to approval because their earnings are considered more stable.
2. Recent Credit Inquiries
Each time you apply for new credit—a car loan, credit card, or even a cell phone—your credit score can take a minor hit. Multiple recent inquiries raise red flags for lenders who may view them as signs of financial distress or overextension. It’s best to avoid any new credit applications in the months leading up to your mortgage application.
3. Your Bank Statements
Lenders will often ask to review several months of bank statements to verify income, spending habits, and down payment sources. Any large, unexplained deposits can raise questions, especially if they’re not from traditional savings or employment. Frequent overdrafts or evidence of financial instability (like bouncing payments) can also negatively affect your application.
4. Your Debt-to-Income Ratio
Even with a solid income, carrying a high amount of consumer debt—such as car loans, student loans, or credit card balances—can hurt your chances of getting approved. Lenders use your gross debt service (GDS) and total debt service (TDS) ratios to evaluate whether your debt load is manageable.
5. Past Delinquent Accounts or Collections
Even if your current credit score is decent, past delinquencies, collections, or unpaid accounts—even if they’re old—can create trust issues with lenders. It’s important to review your credit report for errors and clean up any outstanding issues well in advance.
Would You Qualify Right Now? Take the Quick Quiz:
✅ Do you have a steady job with consistent income (2+ years)?
✅ Is your credit score above 680?
✅ Have you avoided applying for new credit in the past 6 months?
✅ Can you show where your down payment is coming from?
✅ Do your total monthly debts (including mortgage) fall under 40% of your gross income?
If you answered “yes” to most of these questions—you’re likely in good shape to qualify for a mortgage. If not, consider working with a mortgage broker to create a plan. They can help identify what’s holding you back and guide you toward a successful approval.
Getting approved isn’t just about income and credit. It’s about showing lenders that you’re responsible, stable, and prepared for the long-term commitment of homeownership. Take the time to prepare—and position yourself for success.
Want to learn more? Contact us at 780.792.0009 or charlene@charleneelliot.ca
