For individuals with a regular salary from an employer, income verification usually involves:

• Pay stubs: Providing recent pay stubs that show details of the individual’s earnings, deductions, and taxes. This helps lenders assess the consistency and stability of income.
• Employment verification: Lenders might contact the employer to verify the individual’s employment status , position, and salary. This step confirms the authenticity of pay stubs.
• W-2 Forms: Individuals can provide their W-2 forms, which summarize their annual earnings and tax withholdings. This is often required for mortgage applications.

Self employed individuals have a more complex income structure, and income verification may involve:

• Tax returns: Providing copies of recent tax returns, including Schedule C (Profit or Loss from Business) and other relevant forms. This gives lenders an understanding of the individual’s income over time.
• Profit and loss statements: Alongside tax returns, self-employed individuals might need to provide detailed profit and loss statements for their business. This offers insight into the health and stability of their income source.
• Bank statements: Providing bank statements for the last two years can help verify regular deposits and income sources related to the individual’s business activity.
• Two years of notice of assessment: These are documents issued by the tax authority (CRA) that confirm your field tax returns and the amount of income you reported. Notice of assessment are typically issued after you submit your annual tax returns.
• Copy of business license or registration: This is a proof that your business is legally registered or licensed to operate in your jurisdiction. It confirms the legitimacy of your business entity.
• Articles of incorporation(if applicable): If you’ve incorporated your business, you’ll need to provide articles of incorporation. These documents formally establish your business as a separate legal entity and provide information about its structure and ownership.

Freelancers and gig economy  workers often have multiple income sources, which can be verified through:

• Invoices and contracts: Providing copies of invoices, contracts, or agreements for freelance work and services. This demonstrates a consistent stream of income from various clients.
• Bank statements: Similar to self-employed individuals, bank statements can verify income deposits from different sources.

Employees working on these position might experience fluctuation in income, and verification may involve 

• Income averaging: Some lenders employ a technique called income averaging, which takes the average of a borrower’s salary over a certain time frame. Seasonal changes can be partially explained by this.
• Employment verification: To learn more about the nature of the work and how revenue fluctuates over the year, lenders may get in touch with the employer.

Individuals who receive rental income may need to verify this income source through:

• Rental agreements: Providing copies of rental agreements that outline the terms and income from rental properties.
• Tax documentation: Furnishing tax documents related to rental income, such as Schedule E (Supplemental Income Loss). This validates the reported rental income.

• Child support: If you receive child support payments, providing a copy of the separation or divorce agreement along with several months of bank statements that show the consistent receipt of these payments can be important.
• Pension income: Pension income is a stable source of income and can significantly strengthen your financial profile. For this you can provide documentation that verifies your pension income, such as pension statements and awards.
• Permanent disability: If you are on permanent disability, having a letter confirming your permanent status, along with a paystub if applicable, can be crucial for demonstrating your ongoing income source. Permanent disability income is often considered stable and reliable.
• Maternity leave: In some cases lenders may consider your full employment income if you can provide a letter of employments confirming your plan to return to work within one year after maternity leave. This allows you to include your pre-maternity in the assessment.