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Residential Mortgages - Maternity Leave 

Show Notes

In this episode of the Close More Deals podcast, host Scott Dillingham dives into how maternity leave impacts mortgage qualifications in Canada. He explains the varying lender policies on using maternity leave income, emphasizing that many clients get declined unnecessarily due to mismatched lenders. Scott highlights top-tier options where 100% of pre-leave income can be used if returning to work within 18 months, and other common scenarios allowing full income consideration within 12 months or even two months. He stresses the importance of a return-to-work letter from the employer confirming the start date and role, which is required across all supportive lenders. For those not returning, such as stay-at-home parents, income typically can't be used unless opting for alternative lenders.

Scott shares practical advice for navigating these programs to avoid denials, noting that some lenders don't support maternity leave income at all, while others offer flexible terms like 60% usage between 12 and 18 months. He encourages listeners who've been told they can't proceed to reach out, as pivoting to the right lender often secures approval. Drawing from real client experiences, the episode underscores how understanding these nuances can turn potential roadblocks into successful deals. As of November 2025, these policies remain consistent with Canadian mortgage guidelines, protecting applicants on leave and focusing on pre-leave earnings for qualification.

This informative session equips homebuyers and real estate professionals with essential knowledge to qualify during maternity leave, blending lender insights with actionable steps for smoother applications. Whether planning a purchase or renewal, Scott's tips help maximize income consideration and avoid common pitfalls in the mortgage process.

Key Takeaways

  • Top-Tier Lender Options: Select lenders use 100% of pre-maternity leave income for qualification if returning to work within 18 months, requiring a return-to-work letter.
  • Common 12-Month Policies: Many lenders accept 100% of income if the return date is within 12 months, helping more applicants qualify without reduced earnings.
  • Short-Term Return Requirements: Some lenders only consider full income if starting back at work within two months, limiting options for longer leaves.
  • Flexible 12-18 Month Terms: One lender allows 100% within 12 months or 60% of income from 12 to 18 months, providing a middle-ground solution.
  • Essential Documentation: All supportive lenders mandate an employment letter detailing return date, role, and compensation; without it, income can't be used.
  • Non-Returning Parents: If staying home post-leave, income is typically excluded unless using alternative lenders for qualification.
  • Avoiding Denials: Don't rely on banks with strict policies—pivot to compatible lenders to close deals, especially for clients on extended leave.

Links to Show References

Episode Transcription

Scott Dillingham: Welcome back to the Close More Deals podcast. I'm your host, Scott Dillingham. I thought about the flow of the show, and I'm not gonna dive into rates verbally. What I'm doing is I'm installing dynamic notes into the show down below. So you'll see the rates daily. So no matter what episode you look at, it will always reflect the correct rates. Or if I record it, it won't be quite accurate. So I just wanna highlight that. So we're not gonna dive into rates. We're gonna dive directly into the programs.

Mortgage Qualification Strategies: Navigating Maternity Leave in Home Loan Preapprovals

So today, I'm gonna talk to you about maternity leave. I know it seems funny, but the thing is there's so many different ways lenders process maternity leave. And I see clients that are declined all the time, say, oh, my bank won't accept it. They can't move forward. And we close deals, so I need you to know about this program so you can qualify. And I made a note here in front of myself here of all the different criteria.

Top-Tier Lender Options: Maximizing Income During Maternity Leave

We have just a handful of lenders that'll use 100% of the maternity leave as long as you're returning within eighteen months to work. Okay? That's the top tier. That's the highest of all of them.

Flexible 12-Month Return Policies: Broad Lender Support for Mat Leave

Then we have a quite a bit of lenders that'll use a 100% of the maternity leave when you are returning to work within twelve months.

Strict Two-Month Return Requirements: Understanding Lender Limitations

Then there's a bunch of lenders that only use the maternity leave, so they'll use a 100% of your income before you left as long as you're going back to work within two months. K. K?

Hybrid Income Calculations: 60% Usage for Extended Leaves

Then I've got another lender that'll use a 100% within twelve months or 60% of your total income from twelve months to eighteen months. I'm gonna explain what this means in a minute, but all of them require the letter of employment, and some of the lenders don't even support mat leave altogether. So keep that in mind.

Real-World Application: Why Timing Matters in Mortgage Preapproval

So what this means is say your client has less than twelve months of the mat leave. Right? There's only so many lenders that we can go to that support the 100%. So if you were to bring them to the bank or banks, plural, that require that they be starting their job within two months, that bank or lender would say your income doesn't qualify. So, of course, they'll use the other spouse's income because they're not working. Sorry. They are working. The spouse that had the child is not working. So the thing is is you don't necessarily know the timing of which bank and what they support.

Realtor Mortgage Advice: Avoid Declines and Pivot to Success

So to just let your client go to any bank and hope that it works won't work. So anyways, if you've been told, if you've heard from your client, hey, I'm on that leave. We can't move forward. Reach out. Okay? The details will be in the bottom. We can absolutely move forward with this. It's not a problem. It just depends on the timing. But, again, they have to have that return to work letter.

Essential Documentation: The Return-to-Work Letter Breakdown

So the return to work letter just says, x, y, and z is starting work on this date back in their regular role or whatever if there's a new role, right, Aligning the new role and what the new compensation is. That's what they'll require. If it's somebody who's having a baby and they're retiring and they're going to be a stay at home mother or father, then that income cannot be used unless we're working with alternative lender. So keep that in mind. But it's imperative that you know this because, again, you don't wanna let your client go to the wrong lender.

Closing the Deal: Mortgage Broker vs. Bank Insights for Mat Leave Clients

They get declined, and there's no deal here when really we just have to pivot, and we've got a deal. Anyways, I hope this helps. Check the show notes for full resources, including how to book a call with someone on my team, and I look forward to seeing you next week.