Welcome to our in-depth exploration of how maternity leave impacts your ability to secure a mortgage in Canada. If you’re expecting a child or currently on mat leave, you might worry that this temporary pause in your career could derail your homeownership dreams. The good news? It’s entirely possible to qualify for a mortgage during this time, provided you understand lender requirements and prepare accordingly. In this article, we’ll break down the key criteria, documentation needed, common pitfalls, and tips to help you navigate the process smoothly. Whether you’re a first-time buyer or looking to refinance, knowing these details can make all the difference in closing your deal.
Maternity leave, often referred to as “mat leave,” is a protected period in Canada where new parents can take time off work to care for their child. Under Employment Insurance (EI), you can receive benefits covering up to 55% of your average weekly earnings for 12 months or 33% for an extended 18 months. Many employers also offer top-ups to bring this closer to your full salary. However, when it comes to mortgage applications, lenders focus less on your current EI payments and more on your long-term income stability. This is because mat leave is viewed as a temporary situation, not a permanent income reduction.
In Canada, maternity and parental benefits are designed to support families during the early stages of child-rearing. Eligible individuals can start receiving maternity benefits as early as 12 weeks before their due date, with a maximum of 15 weeks for maternity-specific leave, followed by up to 35 or 61 weeks of parental benefits shared between parents. While this provides crucial financial support, it often means a dip in income—typically to around 55% of your pre-leave earnings without employer top-ups.
For mortgage lenders, this reduced income can initially seem like a red flag. They assess your ability to afford payments through metrics like the Gross Debt Service (GDS) ratio (which should be under 39%) and Total Debt Service (TDS) ratio (under 44%). If they’re only looking at your EI benefits, you might qualify for a smaller loan or face denial. However, most lenders recognize mat leave as temporary and will consider your full pre-leave income if you can prove you’ll return to work. This approach helps maintain your borrowing power, potentially allowing you to secure a mortgage amount similar to what you’d get while actively employed.
It’s worth noting that not all lenders treat mat leave the same way. Some are more flexible, while others have stricter timelines. This variability is why working with a mortgage broker—who has access to multiple lenders—can be invaluable. They can match you with institutions that align with your return-to-work timeline, avoiding unnecessary denials.
Lenders in Canada have diverse policies on how they handle income during maternity leave, often tiered based on your expected return date. Here’s a breakdown of common approaches:
Importantly, these criteria apply primarily to base salary or guaranteed hours. Variable income like bonuses, commissions, or overtime often requires a two-year average and may not be fully included. Self-employed individuals face additional scrutiny, needing to provide Notices of Assessment and a clear return plan.
If your leave exceeds these timelines or if a lender doesn’t support mat leave income at all, you might be limited to alternative lenders, which often come with higher interest rates. Always check with a professional to identify the best fit.
To leverage your full pre-leave income, documentation is key. The cornerstone is a return-to-work letter from your employer. This should include:
If your role or compensation changes upon return, the letter must detail these updates. Additionally, provide recent pay stubs from before leave, T4 slips, and Notices of Assessment for the past two years. Lenders will also review your credit score (aim for 640+), debt levels, and ability to pass the mortgage stress test, which qualifies you at a rate about 2% higher than your actual rate.
For co-applicants, the non-leave partner’s income can bolster the application. Government benefits like child support or the Canada Child Benefit may also be considered in some cases, providing a boost to household income.
If you plan to become a stay-at-home parent or retire from your job, things get trickier. In these scenarios, your mat leave income can’t be used for qualification, as it’s not ongoing. Lenders will rely solely on other household income sources, such as your partner’s salary or investments. Alternative lenders might be an option here, but expect higher costs.
This highlights the importance of timing: If possible, apply before starting leave or early in your leave when a return is still planned.
To boost your chances:
Avoid common mistakes like assuming all banks are the same or neglecting to get that return letter—these can lead to denials.
Myth 1: You can’t get a mortgage on mat leave. Reality: With proper documentation, many do.
Myth 2: Lenders use EI income. Reality: They prefer confirmed pre-leave salary.
Myth 3: Extended leave disqualifies you. Reality: As long as return is within lender timelines, you’re good.
Qualifying for a mortgage while on maternity leave in Canada is achievable with the right preparation and lender. By understanding criteria, gathering documents, and seeking expert advice, you can turn what seems like a hurdle into a seamless process. If you’ve been declined elsewhere, don’t give up—reach out to a mortgage specialist today. For personalized guidance, check our resources or book a call.
It influences income assessment but not eligibility. Lenders use pre-leave salary with return confirmation, ensuring fair qualification under anti-discrimination rules.
Yes—provide employer verification of your return and salary to use full earnings, often within 12-18 months.
Temporarily through income views, but strategic timing and docs allow full borrowing power, just like employed applicants.
Absolutely, with a return letter and financial prep. Many parents do, leveraging partner income if needed.
High debt ratios, poor credit, or incomplete income proof—universal flags, amplified if mat leave docs are missing.
Yes, for customized strategies; it’s protected info that helps match flexible options without bias.
Definitely—apply early with verification to avoid reduced income assumptions.
EI benefits support but don’t define qualification; focus is on post-return salary.
No legal mandate, but sharing with a broker aids proactive planning.
Yes, via confirmed future income—aim for 640+ credit and solid ratios for best results.