Why do I need a job letter?
Joel Olson • July 22, 2017
Almost all lenders require a job letter from your employment in order to approve your income. The only time this
would not be needed is when you are self-employed. There are many reasons that this benefits you.
- Let’s face it, you could’ve had a sick day, had to go home early, or had some other reason that you missed a few hours on your paystub. Almost all lenders who don’t require a job letter average your two paystubs together. This means that without a job letter you would qualify for much less.
- A great time to buy a home is when you feel stability in your income. This often happens upon getting a new job, or a raise on your current one. Your paystub or previous tax year will not reflect that, but it may be needed in order to qualify for your new mortgage. A job letter takes care of that.
- There are only a small amount of lenders (all banks) who don’t require a job letter, but the all the lenders who do require a job letter offer much better pricing . Rate is one thing, however every lender that does not require a job letter will charge more on terms like penalties, etc.
The truth is that most people don’t want to get a job letter, because they don’t want to bother their employer. Yet
every employer will have had to write one at some point for an employee.
It is also possible, that you have heard that a letter was not ever required for a mortgage, this was pre- a government regulation in the last several years that requires lenders to be much more strict.
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. This decision comes against a backdrop of significant global uncertainty — and for Canadian homeowners, buyers, and anyone with a mortgage coming up for renewal, here's what it means.
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