Application Mistakes Part 2: Income

Almost every loan application will ask for your source of income. The applications through LoanConnect’s lender network are no different. You will usually be presented with a number of options, so it’s important to ensure you’re selecting the one that best suits you. This is important because your source of income can be a larger deciding factor for some lenders than other information. While the lender may be more flexible with housing, citizenship or loan type, some will only lend to employed applicants. However, this won’t always be the case, other lenders will fund approved applicants with any source of income.

On most applications, your income choices will be as follows:

Full-time employment
  • This usually means you work 35 or more hours each week.
Part-time employment
  • This usually means you work up to 34 hours per week.
  • If you own/run your own business.
  • If you are receiving a Retirement Pension (CPP, OAS, or a private plan).
Social Assistance
  • This can vary by Province. Typically, social assistance is considered Government Benefits that are not a Disability Pension or the Child Tax Benefit.
  • If you are not currently working and receiving Government Benefits or Employment Insurance (EI). Or if you’re not currently receiving income for any reason – temporary lay-off, loss of job, sick leave, or parental leave.
  • If you receive a Disability Pension from the Provincial or Federal Government, such as ODSP (Ontario), or AISH (Alberta), or through a private plan from a previous employer
  • Your main source of income is the Child Tax Benefit.
  • You work on a contract basis.
  • Cash is your primary method of income.
  • You receive payment through a Structured Settlement.

Generally, if you earn income from a source not listed above, but not from the Government, you should choose “other”. While this may not necessarily mean an automatic application denial, it does limit your options. Most lenders have a minimum monthly income requirement and will not approve certain sources of income.

Making sure you enter the right income source could greatly affect your lender options that are provided. Keep in mind that lenders will review ~90 days of your banking history to confirm your income. And most will need to verify your proof of income as well.

What Else Affects my Application?

Most lenders do not view the Child Tax Benefit as income. From their perspective that is simply a Government Benefit designed to offset the cost of raising a child.

If you are self-employed, make sure you have your last 2 years NOAs (Notice of Assessment) from the CRA before applying. Lenders will want to see a consistency in income (or an increase) over the previous two years. If you do not have those, contact us here at as there may be other options available to you.

Other Application Mistakes

While income source is a big mistakes I see, it’s not the only one. Continue reading how other areas of your application could also be restricting your approvals, and/or rates.

  • Housing Choices – Read part 1 of my series now and why your housing choice could make or break your application
  • Preventing errors – Read part 3 of my series and understand how taking your time could actually save you time
  • Loan types – Read part 4 of my series around why loan types may not be as interchangeable as you may think

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