Getting a Job Letter for Mortgage Approval
Congratulations! Buying a home or condo is a big step, and you’ve decided that it’s right for you.
Before you can make an offer on a property, you’ll need to be pre-approved for a mortgage. A key step toward obtaining that approval is getting a job letter from your employer to verify that you are gainfully employed and earning enough money to handle mortgage payments.
Lenders are quite specific about the information they want to see in an employer’s letter, so let’s run through the requirements. Why not get it right the first time?
The job letter must:
- Be written on company letterhead as an indication that you work for a legitimate enterprise. If it’s a mom and pop operation that isn’t very formal, create some letterhead online (there are several free sites online to accomplish this) then paste the finished logo onto a blank page, save it, fill it in and print.
- Be typed. It needs to look professional. You are trying to impress the lender.
- Be dated. The lender wants to know that it’s proof of current employment, not from a job you quit last year.
- State the title of your position. What do you do for this company?
- Give your start date at the company. Lenders want to see stability. If you have been there less than two years, you may need to obtain a similar letter from your last employer, too.
- State whether or not you are on probation. The lender wants to be sure your employment will continue. If you’re still on probation, you may want to wait until your probationary period is completed before applying for a mortgage.
- State your income. If you are salaried, it’s easy to state. If you are hourly, the employer must state your weekly guaranteed hours and your hourly wage. If you work a 35-hour week at $25 per hour, the letter should say that. Don’t include overtime hours or bonuses – they vary and can’t be counted as steady income unless backed up for a minimum of two years steady overtime and/or bonus earnings. At that time it must be proven with Notice of Assessments.
- Be signed and give the writer’s title and phone number. The writer must be either the human resources department or the person who has the authority to terminate your employment. In most cases, expect the lender to contact your employer to confirm that the information in the letter is correct. They are verifying the details of the letter. They want to be sure you can afford to repay the mortgage comfortably.
The lender will also ask for pay stubs. Handwritten cheques aren’t appropriate, but if that is how you’re paid, they may want to see evidence of ongoing paycheque deposits in your bank account. This will require a min of 6 months bank statements to show the regular deposits of your pay.
If you provide more standard type cheque stubs, they should include the source (who is issuing the cheque) and your year-to-date earnings, broken out by salary and commission, if that applies.
Why not print this page of requirements and take it to your employer when you request a job letter? You’ll make it easy for everyone including yourself.