Glossary
Stated Income Mortgage
A stated income mortgage is one where the borrower declares income without full documentary proof, now rare and tightly restricted in Canada..
A stated income mortgage is a mortgage in which the borrower declares their income on the application instead of proving it with documents such as CRA notices of assessment, T4 slips, or business financial statements. Lenders once accepted these declarations with little or no verification. In Canada today the product is uncommon, offered mainly by a limited number of alternative and private lenders, and held to strict underwriting expectations.
Why stated income lending is now rare
Federally regulated lenders must follow OSFI Guideline B-20, which requires them to verify a borrower's income and assess their ability to repay the loan. Canada's mortgage stress test also applies to most new mortgages, testing the borrower at a qualifying rate above the contract rate. Because income verification is a core part of that process, a file where income is only declared generally cannot clear a large bank's or monoline lender's underwriting.
What remains is a niche. Some lenders accept declared income when a borrower's documentation is genuinely difficult to assemble — for example a self-employed applicant with heavy write-offs, recent incorporation, or income concentrated at year-end. Even then, the lender usually wants corroborating evidence: bank statements showing deposits, a business licence, GST/HST filings, or an accountant's letter.
How lenders treat declared income
Rather than taking the number at face value, an underwriter typically adjusts it. Common approaches include:
- Applying a discount or "haircut" to the declared figure before calculating ratios.
- Requalifying the file using a stated income figure that fits the property and loan size.
- Charging a higher rate, a lender fee, or both to reflect the added risk.
The adjusted income then feeds the same affordability tests as any other mortgage: GDS and TDS ratios, the stress test, and a check of credit history and down payment source. A stated income file does not bypass those tests — it simply changes how one input is established.
What it costs a borrower
Because the risk sits with the lender, pricing on declared-income products is typically higher than on a fully verified mortgage from an A-lender, and the available loan-to-value may be lower. Borrowers may also find fewer term and prepayment options. Anyone considering this route should compare it against a conventional self-employed mortgage, where documented income often produces a better rate.
Exaggerating income to qualify is mortgage fraud, regardless of the lender. Confirm current requirements directly with the lender and check OSFI and FCAC guidance before relying on any declared-income product.
Frequently asked questions
Can I still get a stated income mortgage in Canada?
A small number of alternative and private lenders still offer declared-income products, but most federally regulated banks and monoline lenders require documented income under OSFI Guideline B-20. Availability depends on the lender, the property, the down payment, and the strength of the rest of the file, so confirm current criteria directly with each lender.
What documents can replace a stated income declaration?
Lenders often accept CRA notices of assessment, T1 generals, T4 or T4A slips, business financial statements, accountant-prepared letters, bank statements showing regular deposits, or GST/HST returns. Which combination works depends on whether the borrower is salaried, commissioned, or self-employed, and on the lender's own policy.
Is a stated income mortgage the same as an alt-doc mortgage?
They overlap but are not identical. An alt-doc mortgage still relies on some documentation, such as bank statements or a letter from an accountant, to support the income figure. A purely stated income file relies mainly on the borrower's declaration, which is why it attracts higher rates, tighter limits, and far fewer lenders.
Sources
Related terms
- Income Verification — The process a lender uses to confirm the income stated on a mortgage application, using documents such as pay stubs, tax slips, and CRA notices.
- Alt-Doc Mortgage — An alt-doc mortgage is a mortgage qualified using alternative income documentation, such as bank statements or business records, instead of standard CRA tax filings.
- B-Lender — A B-Lender is an alternative Canadian mortgage lender that accepts weaker credit, irregular income, or unusual properties at a higher interest rate.
- Private Mortgage Lending — Private mortgage lending is mortgage financing funded by private investors or mortgage investment corporations rather than banks, usually for short terms at higher rates and fees.
- Mortgage Stress Test — The federal mortgage stress test is a qualification rule that makes lenders check whether you could afford your mortgage if rates were higher than your contract rate.