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How Commission Income Is Reviewed for a Mortgage in Ontario
A strong income does not always make mortgage qualification simple.
If part or all of your earnings come from commissions, a lender may ask more questions than it would for someone earning a fixed salary. The issue is usually not whether the income is real. The lender needs to determine how much of that income can reasonably be used for mortgage qualification and whether it appears stable enough to continue.
This is common for real estate professionals, automotive salespeople, recruiters, account executives, technology salespeople, financial professionals, and other commission-based workers across Toronto and the GTA.
Income history, recent trends, employment continuity, supporting documents, debts, credit, down payment or equity, and mortgage structure can all influence the final decision.
Quick Answer: Can Commission Income Be Used for a Mortgage?
Yes. Commission income can be used when qualifying for a mortgage in Canada, but lenders may assess it differently from a fixed salary.
The Canada Revenue Agency recognizes commissions as employment income when earned as an employee. Commissions reported in Box 42 of a T4 are reported on line 10120 of the tax return. CRA explains employment commissions here.
CMHC also identifies salary and commission as income that mortgage applicants may need to document.
The amount a lender actually uses can depend on your income history, recent trend, lender policy, mortgage insurer where applicable, and overall application.
Your actual income and your mortgage-qualifying income are not always the same number.
Key Takeaways
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Commission income can be considered for mortgage qualification.
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Lenders may treat commission as variable income.
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Historical earnings and consistency can matter as much as your highest earning year.
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T4s, pay stubs, employment letters, Notices of Assessment, and other records may be requested.
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Some underwriting programs use a two-year history, but this is not a universal lender rule.
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A higher current-year income does not guarantee that the full higher amount will be used.
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Changing employers or compensation structures can affect how income continuity is assessed.
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One lender declining the file does not necessarily mean every lender will make the same decision.
Table of Contents
Why Is Commission Income Reviewed Differently?
A fixed salary gives an underwriter a relatively clear annual income figure.
Commission income can change from month to month or year to year. A salesperson may have an excellent quarter followed by a slower period. A territory may change. An employer may introduce a different compensation plan. Market conditions may also affect sales volume.
The lender therefore needs to answer an important question:
Is the income being used for the mortgage reasonably supported by the borrower's history and documentation?
CMHC advises mortgage applicants to be prepared to provide proof of employment, including pay stubs or other evidence of salary or commission. It also notes that current and previous employer information may be relevant depending on the applicant's work history. CMHC provides mortgage application documentation guidance here.
A strong file should make the income story easy to understand.
How Do Lenders Calculate Commission Income?
There is no single calculation used by every lender in Ontario.
Policies can vary by lender, mortgage product, insurer, and borrower circumstances.
One current example comes from Sagen, which categorizes commission income as variable income within its covenant underwriting guidance. Under that framework, variable income generally requires at least two years of history, and the qualifying amount is generally based on the lesser of the previous year's income or the two-year average, subject to the details and exceptions in the guideline.
Sagen's current underwriting guidance is available here.
Example
|
Year |
Commission Income |
|
Previous Year |
$90,000 |
|
Most Recent Year |
$110,000 |
|
Two-Year Average |
$100,000 |
Under an approach using the lower of the most recent year or two-year average, the qualifying figure could be $100,000, rather than $110,000.
This does not mean every lender will use the same method.
Do not base your purchase budget on your highest recent earnings until you know which income figure the lender is likely to accept.
What Documents May Be Required?
The exact requirements vary by lender and employment structure.
A commissioned employee may be asked for documents such as:
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recent pay stubs
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employment letter
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T4 slips
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Notices of Assessment
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tax documents
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year-to-date earnings
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commission statements where relevant
The objective is consistency.
If your employment letter, pay records, T4s, and tax information tell different stories, the lender may ask for more documentation or clarification.
Strong income can still create delays when the supporting paperwork is incomplete or difficult to reconcile.
What Strengthens a Commission-Income Mortgage Application?
Several factors can make the application easier to assess.
A Clear Income History
A consistent history helps the lender understand what level of income may be sustainable.
Stable or Improving Earnings
An upward trend can help the overall application, although a lender may not automatically use the newest and highest income amount.
Employment Continuity
Staying in the same industry or occupation may help provide context, particularly if you recently changed companies.
Consistent Documentation
Your pay statements, tax records, and employment information should support the income being presented.
A Strong Overall Application
Income is only one part of mortgage qualification. Credit, debts, property, down payment or equity, and the requested mortgage amount also matter.
For borrowers whose income does not fit a straightforward salary model, reviewing Residential Mortgages or Self-Employed Borrowers options early may help clarify how the application should be structured.
What If My Commission Income Has Increased or Decreased?
Suppose you earned:
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$80,000 two years ago
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$95,000 last year
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and are currently on track for $130,000
Can you qualify using $130,000?
Possibly, but not automatically.
Some lenders place greater weight on completed historical income than projected earnings. A strong current year can still support the application, but borrowers should not assume every dollar of the higher income will be recognized.
The opposite situation can also create questions.
If your income fell from $130,000 to $115,000 and is now tracking near $95,000, the lender may want to understand why.
Was it a temporary slowdown? A territory change? Parental leave? A new role? A compensation change?
The income trend often matters as much as the highest income year.
This can be particularly important for buyers in Toronto and the GTA, where even a modest difference in qualifying income may affect the purchase budget.
Does Changing Jobs Affect Commission-Income Qualification?
It can.
Someone who has spent eight years in the same industry and moves to another established employer may present a different profile from someone who entered commission sales for the first time a few months ago.
A job change is not automatically negative.
The lender may consider:
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previous employment
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experience in the industry
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similarity of the new role
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new compensation structure
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current earnings
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length of commission-income history
A useful question is not simply, “Will changing jobs stop me from getting a mortgage?”
A better question is:
“How will the lender view the continuity behind my new income?”
Is Commission Income the Same as Self-Employed Income?
Not always.
An employee earning commissions through payroll may have commissions treated as employment income.
An independent contractor, sole proprietor, incorporated salesperson, or business owner may instead be evaluated under self-employed underwriting.
CMHC notes that self-employed applicants may need documents such as Notices of Assessment, T1 Generals, proof of income, and business documentation. CMHC's self-employed mortgage guidance is available here.
If your income includes both commissions and business income, it may be helpful to review Self-Employed Borrowers options rather than assuming standard employee-income rules will apply.
How Does Commission Income Affect Mortgage Affordability?
Once the lender determines how much income it will recognize, that figure becomes part of the affordability calculation.
For CMHC-insured purchase mortgages, CMHC currently lists maximum Gross Debt Service and Total Debt Service ratios of 39% and 44%. It also states that the applicable qualifying rate is the greater of the contract mortgage rate plus 2% or 5.25%.
CMHC explains GDS and TDS calculations here.
For uninsured mortgages subject to OSFI's minimum qualifying rate, OSFI currently states that the qualifying rate is the greater of the mortgage contract rate plus 2% or 5.25%.
OSFI's current Minimum Qualifying Rate guidance is available here.
These are reference points, not guarantees that a borrower will qualify at a particular ratio or mortgage amount. Lenders can apply additional underwriting requirements.
Mortgage affordability should be calculated using income the lender is likely to recognize—not simply your best recent earning month.
What If the Bank Declines the Application?
A decline does not always mean the file is impossible.
The first step is to understand the reason.
Was the issue:
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commission-income history?
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the amount of income accepted?
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incomplete documentation?
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debt ratios?
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credit?
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property?
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down payment?
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requested mortgage amount?
Alternative lenders may assess mortgage applications differently depending on the income, property, credit profile, and overall file.
In some situations, Alternative Lending Solutions or Private Mortgages may also be reviewed.
These options should not be treated as automatic replacements for traditional financing. Rates, fees, equity requirements, terms, affordability, and exit strategy all need careful consideration.
A Second Review Can Be Worthwhile
If your income is strong but qualification remains unclear, a second review may help.
Sometimes another lender may assess the file differently. Sometimes better documentation can improve clarity. In other situations, the best decision may be to adjust the mortgage amount or wait until the income history is stronger.
If timing matters, reviewing the file early can reduce pressure later.
Mortgage brokering in Ontario is regulated by FSRA. Current FSRA information on mortgage brokering is available here.
Not Sure How a Lender Will Review Your Commission Income?
Every application is different, and the available options depend on your income history, property, credit, equity or down payment, and overall mortgage structure.
If you're unsure how much of your commission income a lender may recognize, it may be worthwhile to have the full situation reviewed before making a financing decision.
When Should You Get Your Commission Income Reviewed?
Ideally, before making a firm offer on a property.
Ask:
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Which income years were reviewed?
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What qualifying-income figure was used?
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Was year-to-date income considered?
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Which documents still need verification?
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Would a job change affect the file?
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Does the property still require approval?
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What conditions remain?
This is particularly useful for buyers in Toronto, Mississauga, Vaughan, Markham, Richmond Hill, North York, Scarborough, Etobicoke, and other GTA communities where purchase budgets can be sensitive to relatively small changes in qualifying income.
Frequently Asked Questions
Can I get a mortgage in Ontario if all my income is commission?
Yes. Commission income can be considered when qualifying for a mortgage in Ontario. A lender will usually review how long you have earned commission income, how consistent your earnings have been, and whether your supporting documents confirm the income being presented. Your credit, existing debts, down payment, property, and requested mortgage amount also matter. Approval is based on the complete application, not simply on whether your income comes partly or entirely from commissions.
How many years of commission income do I need?
There is no single rule that applies to every lender or mortgage product. Some underwriting programs may look for at least two years of commission or other variable-income history. For example, Sagen's current variable-income guidance generally uses a minimum two-year history, subject to its criteria and exceptions. Other lenders may assess the situation differently. If you have a shorter history or recently changed roles, it is worth reviewing the full application before assuming you will or will not qualify.
Do lenders use my current income or a two-year average?
It depends on the lender, mortgage program, and your income history. Because commission income can change from year to year, some lenders place more weight on completed historical earnings rather than projected current-year income. Under Sagen's current variable-income guidance, for example, the qualifying amount is generally based on the lower of the previous year's income or the two-year average, subject to its criteria and exceptions. Other lenders may use different methods depending on the overall application.
What documents do commission earners usually need?
The exact documents depend on the lender and how your commission income is earned. You may be asked to provide recent pay stubs, an employment letter, T4 slips, Notices of Assessment, year-to-date earnings, commission statements, or other tax and employment records. The goal is to show a clear and consistent income history. Organizing these documents before making a firm offer can help identify missing information or inconsistencies before they create delays in the mortgage review process.
Can I get a mortgage after changing to a higher-paying commission job?
Possibly. Changing jobs does not automatically prevent you from qualifying for a mortgage. A lender may review your previous employment, experience in the same industry, the similarity of your new role, your new compensation structure, current earnings, and your overall commission-income history. A higher projected income is helpful, but it does not necessarily mean the lender will use the full projected amount for qualification. Having the new income structure reviewed early can help you understand what income may realistically be recognized.
Can I still get a mortgage if my bank declined my commission income?
Potentially. A bank decline does not always mean every lender will reach the same decision. The first step is understanding why the application was declined. The issue may involve the amount of commission income accepted, income history, documentation, debt ratios, credit, down payment, property, or the requested mortgage amount. Another lender may assess the situation differently. Depending on the circumstances, alternative or private financing may also be reviewed, with careful consideration of costs, terms, affordability, equity requirements, and exit strategy.
Final Closing Summary
Commission income does not automatically make mortgage qualification difficult, but it often requires more review than a fixed salary.
The lender wants to understand:
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What have you actually earned?
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How stable does that income appear?
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How much can reasonably be used for qualification?
Historical income, recent trends, employment continuity, documentation, debts, credit, down payment or equity, property details, and mortgage structure can all influence the result.
For commission-based borrowers in Toronto, the GTA, and across Ontario, reviewing income before making a firm purchase decision can help identify documentation gaps and create more realistic expectations.
Do not assume your highest earning year will automatically be used.
And do not assume one lender's decline means every lender will reach the same conclusion.
About Hensey Financial
Hensey Financial helps homeowners, first-time buyers, self-employed borrowers, real estate investors, and business owners throughout Toronto, the GTA, and Ontario explore mortgage and financing solutions based on their circumstances.
Whether you are purchasing a property, reviewing commission or self-employed income, refinancing an existing mortgage, consolidating debt, managing an urgent closing, accessing equity, or considering alternative financing, Hensey Financial focuses on practical guidance, clear communication, and careful financing structure.
Every situation is different. A second-opinion review can help clarify which options may be realistic before you make a financing decision.
Phone: 647-350-6641
Website: www.henseyfinancial.ca
FSRA Lic. M08006191 / 12658
