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Mortgage advice for teachers and nurses

Red Deer mortgage guru talks new features to help those in these professions purchase a home

Attention nurses and teachers!

#thatcanadianmortgageguy has some cool features for nurses and teachers to help them buy their homes!

My name is Jean-Guy Turcotte and I’m a mortgage broker, many of my clients call me #thatcanadianmortgageguy. Only because many cannot pronounce my name, so let’s make it easier. Call me JG, JT or #thatcanadianmortgageguy.

Anyway, enough about me.

If you are a nurse, health care professional or teacher and find yourself looking to buy a home, but don’t think you are ready yet, this is a great place for you to start your research. I’ve been fortunate in my 15 year financial lending career to have helped hundreds of clients buy homes.

As a health care professional or educator you have a union and/or a large organizational structure that controls your salary, type of contract, location, etc. Many clients think they are unable to qualify for a mortgage simply because of their current contract with their school district or Alberta Health Services.

But alas, you are in luck! Banks love both of your professions and have ways around some of those ‘temporary’ or ‘casual’ contracts. There are multiple ways for banks, lenders and credit unions to qualify your income, in fact, it may help you qualify for your next home or mortgage easier than you think.

There may be a few more steps to take, but in reality they are documents that we’d need to help you qualify. For instance with the following documentation we can ascertain how much you can qualify for:

1. Two year average via your T4’s or Notice of Assessments

2. T4 and YTD pay stub

3. One year T4 and next year’s contract

4. New permanent full-time contract

5. New permanent part-time contract

6. Maternity leave

7. Pro-rated income for the year (new)

8. Recently dated employment letter (easily available on your employment portal)

What does this mean for me Jean-Guy, JG, JT, #thatcanadianmortgageguy or whatever it is that you call yourself??!

Let’s have a look at a few examples:

Scenario one (two year average) – if you having been working on a casual contract, or no contract at all (subbing, casual hours, etc.) for a couple years you can still buy a home. Banks allow us to average your last two years of Notice of Assessments or T4’s. It does not matter if it is a full two years or not. If you worked only two months in 2014, but worked a full year in 2015, we can average those two years of T4’s.

Example: 2014 T4: $20,000 + 2015 T4: $40,000. The bank will use $30,000 for income qualification.

Scenario two (T4 and YTD pay stub) – if you have only been on the job for less than two tax years, that is okay! Banks and lenders will allow us to take your most recent T4 income and average that with your most recent YTD (year to date) pay stub. Or take the pay stub year to date if it is less than last year’s T4.

For example: 2015 T4: $45,000 and YTD pay stub for 2016 is $60,000. We can average the two: $52,500 and use that for qualification.

Scenario 3 (T4 and next year’s contract) – remember that banks will take a two year average? Even though your new temporary or permanent contract has not even started yet we can use the average of the two! And potentially use the full contract, but let’s pretend we can only use the average. We will take your 2015 T4 or 2016 YTD pay stub from last year and average it with your new contract that you just were offered. Even if it’s a temporary position!

Example: 2016 T4 or year end pay stub: $40,000 and new contract for 2017 is $70,000. We can average the two together because we know that the contract is promised for at least the following year. Therefore $55,000 is what we can use for qualification.

In some cases with certain lenders we can use the new temporary contract at $70,000, though other qualifying criteria must be met too!

Scenario four (new permanent contract) – this one is straightforward and the easiest for everyone. We will use your new permanent guaranteed contract to qualify you for the mortgage. It doesn’t matter if it’s your first day on the job or 10th year, we will use what your new permanent position offers. If it says $80,000, that is the number we will use.

Scenario five (new permanent contract – part time or 0.5 FTE) – if you are guaranteed a specific set of hours per week, but it is guaranteed and permanent we can use it! Even if it’s only three days a week and it’s a brand new position with the district or AHS, we can use that guaranteed base. We can not use extra shifts that you take over and above until you have two years of that extra income being consistent. But your base salary is usable from day one, even though it is not full time.

Scenario six (maternity leave) – if you are pregnant currently and are on maternity leave receiving income from EI we do not need to use the reduced amount. As long as you have a contract/position to return to, we can use your full salary on your contract. Even if you have nine months left on your mat leave, we can use your returning to work salary as of right now. It is pretty slick. You will obviously need to verify this for the bank, by providing a letter of employment confirming that your position is waiting for you.

Scenario seven (pro-rated income) – this one is a bit rare because hardly any banks do this. But, it does exist. Let’s say you have been working at your new casual job for only nine months. It is a casual position with no guaranteed hours at all. We can take your last nine months of pay stubs, add up the total income for those months, divide it by nine to get the average, and then multiply it by 12 to pro-rate that income over the entire year.

That will project what you are on pace to earn this year. That pro-rated amount would allow you to purchase a home on income that has not been earned yet. It is a very cool product, and therefore is a bit rare! I’ll be up front, this isn’t easy to qualify for, and you would have to have some strong history for this one to work, but I’ve used it in the past and it works if you are closer to the end of a year to show the consistency. It’s kind of like a Sasquatch these days – some have seen it but only a few – but depending on certain circumstances, such as being in the same position for many years, but at a new location or ward.

Jean-Guy Turcotte is a mortgage broker with Dominion Lending Centres Regional Mortgage Group in Red Deer.