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Mortgage Term: Earnings Statement

by | June 19, 2026

An earnings statement, also known as a payslip or pay stub, includes various information detailing an employee’s earnings, deductions, and other relevant financial details for a specific pay period.

Mortgage agents review and compare the information on an earnings statement with T4s and Letter of Employment to ensure accuracy when underwriting mortgages.

Payroll is a very in-depth subject. The following is an identification of the items that are typically found on an earnings statement, but it is not an exhaustive list:

Employee Information

Employer Information

Earnings

Deductions

Net Pay

Year-to-Date Totals

Accrued Benefits

Additional Information

Taxable Benefits

Allowances

Employer Contributions

Employee Information

  • Employee Name: The full name of the employee.
  • Employee ID: A unique identifier assigned by the employer.
  • Pay Period: The start and end dates of the pay period.
  • Pay Date: The date on which the payment is issued.

Employer Information

  • Employer Name: The name of the company or organization issuing the paystub.
  • Employer Address: The physical address of the employer.
  • Contact Information: Phone number or other contact details for payroll inquiries.

Earnings

  • Gross Pay: The total amount earned by the employee before any deductions. This can be broken down into:
    • Regular Pay: Earnings for regular working hours.
    • Overtime Pay: Additional pay for hours worked beyond regular hours, usually at a higher rate (e.g., time and a half).
    • Bonuses/Commission: Any performance-based earnings or sales commissions.
    • Holiday Pay: Compensation for statutory holidays.
    • Vacation Pay: Payment for accrued vacation time.
    • Other Earnings: Any additional earnings, such as shift differentials, tips, or retroactive pay adjustments.

Deductions

  • Statutory Deductions: Mandatory deductions as required by law:
    • Canada Pension Plan (CPP) Contributions: The amount deducted for the employee’s CPP contributions.
    • Employment Insurance (EI) Premiums: The amount deducted for the employee’s EI premiums.
    • Federal Income Tax: The amount deducted for federal income tax.
    • Provincial Income Tax: The amount deducted for provincial income tax (varies by province).
  • Voluntary Deductions: Deductions authorized by the employee, such as:
    • Health Insurance Premiums: Contributions to group health insurance plans.
    • Retirement Savings Plans: Contributions to Registered Retirement Savings Plans (RRSPs) or pension plans.
    • Union Dues: Deductions for union membership fees.
    • Charitable Donations: Employee-directed charitable contributions.
    • Garnishments: Court-ordered deductions for debts like child support or unpaid taxes.

Paystub and Your Mortgage
Paystub and Your Mortgage

Net Pay

Net Pay (Take-Home Pay): The amount the employee receives after all deductions have been subtracted from the gross pay. This is the actual amount deposited into the employee’s bank account or issued as a cheque.

Year-to-Date Totals

  • YTD Earnings: Total earnings accumulated since the beginning of the calendar year.
  • YTD Deductions: Total deductions accumulated since the beginning of the calendar year.
  • YTD Net Pay: Total net pay accumulated since the beginning of the calendar year.

Accrued Benefits

  • Vacation Balance: The amount of accrued vacation time remaining.
  • Sick Leave Balance: The amount of accrued sick leave available.
  • Other Paid Time Off (PTO): Any other accrued leave or time-off balances, such as personal days.

Earnings Statement
Earnings Statement

Additional Information

  • Overtime Hours: Total overtime hours worked during the pay period.
  • Hourly Rate: The rate of pay per hour for hourly employees.
  • Department or Job Title: The department or job title of the employee, sometimes included for organizational purposes.

Taxable Benefits

Employer-Paid Benefits: The value of any employer-paid benefits that are considered taxable, such as life insurance or the use of a company car.

Allowances

Allowances are additional payments provided by an employer to an employee, often to cover specific expenses related to the job. On a Canadian paystub, allowances typically appear in the earnings section, either as part of the gross pay or as a separate line item, depending on the nature of the allowance.

Allowances are either taxable or non-taxable.

Taxable allowances are usually items that are paid regularly, such as a car or housing allowance, regardless of the actual expense. A taxable allowance is included in an employee’s gross income and is subject to statutory deductions such as CPP, EI, and provincial and federal income tax.

Non-taxable allowances are typically items that are reimbursements for occasional expenses and are not paid regularly as part of an employee’s regular compensation. A non-taxable allowance, such as a reimbursement for a hotel at a conference or other reasonable travel expenses (there the employee usually has to remit receipts), may still appear on an earnings statement but will be labelled differently to indicate their non-taxable status.

Employer Contributions

  • CPP Contributions: Employer’s portion of CPP contributions.
  • EI Premiums: Employer’s portion of EI premiums.
  • Pension Contributions: Employer’s contributions to a pension plan, if applicable.

Summary

This information provides a introductory overview of an employee’s compensation and the various deductions applied to their earnings. Earnings statements are important for employees to review and keep for personal financial records, tax purposes, and to ensure accuracy in their payroll.

An earnings statement is a crucial document when applying for a mortgage in Ontario because it provides lenders with verified proof of an applicant’s income and employment status.

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Allen Ehlert

Allen Ehlert

Allen Ehlert is a licensed mortgage agent. He has four university degrees, including two Masters degrees, and specializes in real estate finance, development, and investing. Allen Ehlert has decades of independent consulting experience for companies and governments, including the Ontario Real Estate Association, Deloitte, City of Toronto, Enbridge, and the Ministry of Finance.

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