Buying while on maternity or parental leave

People on parental leave often assume they have to wait until they are back at work to buy. That is usually not true. Most lenders will consider your regular employment income rather than your leave benefits, and plenty of families buy during a leave. What changes is the paperwork, and the details of that paperwork decide whether the file works.

The rule most lenders follow

If you are employed, on an approved leave, and returning to the same employer in the same role at the same pay, most lenders will qualify you on the salary you will be earning when you return rather than the benefits you are receiving now. The logic is straightforward. They are lending for decades and your leave lasts months.

That is a general position rather than a guarantee. Lenders write their own policies, and they differ on the edges: how far away the return date can be, whether they want the leave benefits counted as well, and how they treat someone who has changed employers recently. This is one of the clearest cases where being able to send a file to the lender whose policy fits, instead of arguing with the one bank you happen to use, changes the answer.

The letter that does the work

Everything rests on a letter from your employer. Ask for it before you start looking, because payroll departments can be slow and a missing letter stalls the whole application.

It should state, on company letterhead and signed by someone in a position to confirm it:

• Your position and how long you have held it
• That you are currently on an approved maternity or parental leave
• The date you are expected to return to work
• The position you will return to
• Your salary or hourly rate and guaranteed hours on return, stated as an annual figure where possible

If your return date is not yet fixed, say so honestly and give the intended date. A letter that guesses can be contradicted later, which is far worse than a letter that is clear about what is still open.

Alongside the letter, lenders generally want the same things they would want from any employed applicant: recent pay statements from before the leave, a recent employment verification, and your tax documents for the last couple of years. Some will also ask for proof of your leave benefits.

Where it goes wrong

Not returning to the same job. If you plan to come back part time, change roles, or move to a different employer, the file changes shape entirely. Lenders then qualify you on what you will actually be earning, and the reduced figure has to carry the mortgage. Tell your broker the truth about your plans at the start. A file that unravels a week before closing is a genuinely bad experience, and it is avoidable.

Assuming leave benefits count as full income. Government parental benefits are considerably smaller than most salaries and are temporary. Some lenders will count a portion of them, and some will not count them at all. If your approval depends on treating those benefits as permanent income, it is fragile.

Forgetting what the leave does to your other numbers. Even when income is treated as normal, your bank statements during a leave look different. If you have leaned on a line of credit or carried a card balance to cover the gap, those balances still count against you, and they are weighed at their full payment cost.

Buying at the top of your approval. This is the important one and it is not a lending rule at all. Qualifying on your pre-leave salary means the lender is testing a number you are not currently receiving. If you buy at the maximum, you spend the remainder of your leave carrying a payment on reduced income. The safer approach is to work out what the payment feels like against the money actually arriving each month, and let that set your price rather than the approval letter.

Discrimination has a name here

Lenders cannot treat you worse because you are pregnant or on parental leave. That is settled ground in Canada, and it has been for a long time. If a lender asks you to come back once your leave is over, when the file otherwise qualifies, that is worth challenging rather than accepting.

In practice, most refusals we see are not about policy at all. They are about a missing or vague employer letter, or about an applicant being sent to a lender whose guidelines never fit. Both are fixable.

What to do first

1. Ask your employer for the return-to-work letter, with the details listed above.
2. Gather your pre-leave pay statements and your tax documents.
3. Get the file reviewed before you start looking, so you know which lenders fit and what the real number is.
4. Decide separately what payment is comfortable on the income landing in your account today.

Being on leave narrows the lender pool. It rarely closes it. The work is in choosing the right lender and documenting the return properly, and that is a conversation rather than a form.