Income verification is a central part of any mortgage application, and an incomplete employment letter is a common cause of delays. This page has a template for the letter, what lenders look for in it and the income documents they ask for by type of employment. It is part of the mortgage lenders and brokers guide, and the mortgage underwriting process shows where income verification fits among the other checks.
What lenders need from employed borrowers
For salaried or hourly employees, lenders typically require:
| Document | Purpose | Required By |
|---|---|---|
| Employment letter | Confirms job details, income, and employment status | All lenders |
| Recent pay stubs (2–3) | Checks that the income on the application matches actual pay | All lenders |
| T4 slip (most recent) | Confirms annual employment income | Most lenders |
| Notice of Assessment (NOA) | CRA-verified income from tax return | Many lenders |
| T1 General (2 years) | Full tax return, often required if income varies or includes bonuses or commissions | Some lenders |
Employment letter template
Below is a template covering what most Canadian mortgage lenders ask an employment letter to state. The employer adapts it and prints it on company letterhead.
[Company Letterhead]
Date: [Current date; many lenders want the letter dated within about 30 days]
To Whom It May Concern:
Re: Employment Confirmation for [Your Full Legal Name]
This letter confirms that [Full Legal Name] has been employed with [Company Name] since [Start Date: Month/Year] in the position of [Job Title] on a [full-time / part-time], [permanent / contract] basis.
Compensation details:
- Base annual salary: $[Amount]
- [OR] Hourly wage: $[Amount] at [Number] guaranteed hours per week
- Regular overtime (2-year average): $[Amount] per year
- Annual bonus (2-year average): $[Amount] per year
- Commission income (2-year average): $[Amount] per year
[Employee Name] is not currently on probation and their employment is in good standing.
Should you require further verification, please contact:
[Manager/HR Name] [Title] [Phone Number] [Email Address]
Sincerely,
[Signature] [Printed Name] [Title] [Company Name]
Critical elements lenders look for
| Element | Why It Matters | Common Mistakes |
|---|---|---|
| Company letterhead | Proves the letter is legitimate | Using plain paper or personal email |
| Full legal name | Must match ID and mortgage application | Using a nickname or shortened name |
| Start date | Lenders look for stable employment, and many want the probation period finished | Omitting or providing approximate dates |
| Employment type | Full-time permanent gets the best treatment. Probationary or contract may reduce qualifying income | Not specifying permanent or leaving status ambiguous |
| Base salary | The guaranteed portion of income lenders rely on | Giving net pay instead of gross |
| Variable income (bonuses, overtime, commissions) | Lenders usually average two years of variable income, so it needs to be shown separately from base pay | Lumping everything together as “total compensation” |
| Contact information | Lenders may call to verify the letter | Missing phone number or using a personal number |
| Recent date | Many lenders want it dated within about 30 days | Using an old letter from a previous mortgage application |
Income verification by employment type
Full-time permanent employees
| Required Documents | Notes |
|---|---|
| Employment letter (template above) | Must confirm permanent, full-time, not on probation |
| 2–3 recent pay stubs | Must show YTD earnings consistent with stated salary |
| Most recent T4 | Confirms annual income |
| NOA (some lenders) | CRA-verified income |
Part-time employees
| Required Documents | Notes |
|---|---|
| Employment letter | Must state guaranteed hours per week |
| 2 years of T4s | Lenders average 2 years of part-time income |
| 2 years of NOAs | Verify consistent income over time |
| Pay stubs (2–3 recent) | Verify current hours and income |
Contract / term employees
| Required Documents | Notes |
|---|---|
| Employment contract | Must show remaining term, rate of pay |
| 2 years of T4s (or T4As) | Demonstrates consistent contract work |
| History of contract renewals | Lenders want to see a pattern of continued employment |
| Pay stubs or invoices | Current income verification |
Lenders are more cautious with contract workers, and a record of continuous contracts in the same field over two or more years makes the income easier to accept.
Commission-based employees
Lenders usually average commission income over two years of T4s and Notices of Assessment, and the employment letter should state the base salary (if any) separately from commissions. Mortgages with commission income covers how lenders average it and what happens when commissions fall.
Self-employed borrowers
A self-employed borrower has no employer to write a letter, so lenders rely on two or more years of tax returns, Notices of Assessment and business records instead, and they qualify the borrower on the net income those returns show. Mortgages for self-employed borrowers covers the documents, how income is calculated and the options when reported income is low.
Verification calls
After receiving the employment letter, many lenders make a verification call to the employer:
| What They Verify | How |
|---|---|
| That you work there | Call the company’s main number (not a number you provide) |
| Your job title and status | Confirm details match the letter |
| Your start date | Confirm tenure |
| Your income | Confirm salary or wage matches the letter |
Some practical points that reduce delays:
- HR or the manager named in the letter can expect a call, and the contact person needs to be reachable.
- Some employers have a policy against confirming income by phone; a broker or lender can usually work around this with pay stubs and a T4 if they know in advance.
When the job changes or you’re on leave
A lender re-verifies employment before closing, so a new job between application and closing usually means a new employment letter and pay stubs from the new employer; changing jobs while mortgage shopping covers how lenders treat each kind of change. Borrowers on parental leave usually need a letter confirming the return date and the salary they return to, covered in getting a mortgage on maternity leave.
The bottom line
A complete employment letter on letterhead, recently dated, with base pay and variable pay shown separately and a reachable contact, is one of the simpler parts of a mortgage application, and a missing detail is a common cause of delays. Self-employed borrowers have more to assemble, because tax returns replace the letter. Once income is documented, the other checks are covered in what underwriters review and how lenders read bank statements.