Mortgage Qualification on a Single Income After Divorce

Short answer: Lenders qualify you on your current income, debts and credit, tested at the stress test rate. Employment, self employment, pension and documented support you receive can count. Support you pay counts as a monthly debt, as do joint debts still in your name. If the numbers are short, a lower price, a co-borrower, an alternative lender or time to rebuild can open the door.

What Lenders Ask

“Can this person, on their own, afford the mortgage under current rules?” They look at income, debts and obligations, credit, and the property and down payment.

1. Income

• Employment: recent pay stubs, employment letter, T4s or NOAs. Lenders use your current stable situation, not pre-separation income.
• Self employment: two years of T1s and NOAs, sometimes business financials.
• Support received: can count if it’s in an agreement or court order, paid regularly and expected to continue. You’ll need the agreement and bank statements.
• Other: pension, disability benefits, rental or investment income.

2. Debts and Obligations

Cards, lines of credit, loans, car payments, remaining joint debts and support you pay. Support paid reduces borrowing power the same way a car loan does.

3. Credit

Late payments on joint accounts, high balances or confusion over who pays can hurt. Strong credit means more lenders and better rates. Fair credit is still workable. Challenged credit may mean an alternative lender or time to rebuild.

4. Property and Down Payment

Keeping the current home: the new mortgage must cover the old balance, the buyout, any penalty and costs.

Buying a new home: down payment from savings, RRSP, gifts or sale proceeds, and a price that fits your income and comfort.

The Stress Test Still Applies

You qualify at the higher of 5.25% or your rate plus 2%, so on one income the maximum may be smaller than you expect.

If the Numbers Don’t Work

• A lower purchase price
• A co-borrower
• An alternative lender with different criteria
• Time to rebuild credit, establish income and save

How We Help

An honest look at your income and debts, qualification scenarios, and a clear explanation of how support affects borrowing. Book a confidential call.

This article is general information, not personal financial advice. Rates, rules and programs change. Talk to a licensed mortgage broker about your situation. Lacroix Mortgage Group is licensed and powered by Mortgage Connection Inc.