Notice of Assessment and Your Mortgage

In Canada, a Notice of Assessment (NOA) is an official document issued by the Canada Revenue Agency (CRA) after processing an individual’s or corporation’s tax return. It summarizes the taxpayer’s income, tax liabilities, credits, and any amounts owed or refundable.

Key Information in a Notice of Assessment (NOA)

• Tax Year Assessed – The tax year for which the return was filed.
• Taxable Income – The total income reported on the tax return.
• Deductions & Credits – A summary of applied deductions and tax credits.
• Taxes Owed or Refund Amount – Indicates whether the taxpayer has a balance owing, a refund, or if no further payment is required.
• RRSP Deduction Limit – Shows the taxpayer’s available contribution room for Registered Retirement Savings Plans (RRSPs).
• Canada Pension Plan (CPP) & Employment Insurance (EI) Contributions – Displays contributions made during the tax year.
• Carryforward Amounts – Includes unused tuition credits, capital losses, or other deductions available for future tax years.

Why You Need to Provide an NOAs?

How to Get a Notice of Assessment

Why Lenders Require an NOA

Mortgage Relevant NOA Sections

Using NOAs to Calculate Borrowing Power

Don’t Have 2 Years NOAs?

Stated Income Mortgage Programs

Why You Need to Provide an NOAs?

A Notice of Assessment (NOA) is required by mortgage lenders to confirm a borrower’s reported income, especially for self-employed individuals and commission-based earners. It is also necessary in cases where the borrower is employed but has tax arrears or in the recent past. For example, TD requires a Notice of Assessment (NOA) for full-time employees as part of the acceptable annual documentation to confirm income. This is especially necessary for new customers to Residential Secured Lending (RESL) who must provide one current document and one annual document, with the NOA being an option for the annual document. Existing TD borrowers may only need to provide one current document, but the NOA can still be used to confirm annual income.

Lenders use income figures from the NOA to assess a borrower’s Gross Debt Service (GDS) and Total Debt Service (TDS) ratios.

An NOA ensures that a borrower has no outstanding tax liabilities, which can impact mortgage approval.

How to Get a Notice of Assessment

As part of getting your documents together for making your mortgage application, you need to ensure you have set aside your NOAs for the past 2 years.

Getting Your NOAs

Step 1: Go to the CRA My Account Website

Visit the official Canada Revenue Agency (CRA) My Account login page:

Step 2: Choose a Login Method

The CRA offers two ways to sign in:

Option 1: Sign In with a CRA User ID and Password

If you already have a CRA user ID and password, follow these steps:

1. Click “Sign in with CRA user ID and password”
2. Enter your CRA user ID
3. Enter your password
4. Answer your security questions (if required)

Option 2: Sign In with a Partner (Online Banking Login)

You can log in using your online banking credentials through a trusted financial institution.

1. Click “Sign in with a Sign-in Partner”
2. Select your bank from the list (e.g., RBC, TD, Scotiabank, BMO, CIBC, etc.)
3. Enter your online banking username and password
4. Follow the prompts to complete the login

Step 3: Verify Your Identity (First-Time Users Only)

If this is your first time logging in, the CRA may ask you to:

• Provide your Social Insurance Number (SIN)
• Enter details from your latest tax return
• Input a security code (sent by mail or via email if you registered for digital mail)

Step 4: Access Your CRA My Account

Once logged in, you can:
✅ View and download your Notice of Assessment (NOA)
✅ Check your RRSP and TFSA contribution room
✅ Track your tax return status
✅ Manage direct deposit and payments
✅ View benefits and credits (e.g., GST/HST, Canada Child Benefit)

Forgot Your CRA User ID or Password?

If you forgot your user ID or password, you can:

• Click “Forgot your user ID?” to recover it using your email or personal information
• Click “Forgot your password?” to reset it by answering security questions

Call the CRA Individual Tax Enquiries Line at 1-800-959-8281 for assistance. They can also provide a copy by mail over the phone.

Once you are in, go to the section labeled “Tax Returns” or “Tax Information” and click View notice of Assessment, select the year (s) you need and download the PDF.

Why Lenders Require an NOA

A Notice of Assessment (NOA) is a critical document when applying for a mortgage, particularly for self-employed borrowers, commission-based earners, and business owners who don’t have traditional employment income. Lenders use the NOA to verify income, assess financial stability, and calculate debt service ratios.

Lenders require NOAs to:

Verify declared income: Ensure the income reported on a mortgage application matches tax filings.

Assess Financial Stability: Confirm tax compliance and whether a borrower owes money to the CRA

Calculate Debt Service Ratios – Determine Gross Debt Service (GDS) and Total Debt Service (TDS) ratios to ensure mortgage affordability.

For salaried employees, an NOA is usually supplementary to pay stubs and employment letters.
For self-employed, commission-based, and contract workers, an NOA is a primary income verification document.

Salaried employees may not be required to submit their NOAs, but it is still a good idea to have them on hand or if you want to include commission or bonus income with your mortgage application in which case you will need to submit your NOAs.

For commission-based income, you will need to submit NOAs for the last 2 years to show income stability.

For self-employed people (business owners) you’ll need to submit NOAs for the last 2 years as well as your T1 General and Business financials for full income verification.

Contract workers generally need 2 years NOAs although 1 year is sometimes acceptable to alternative lenders.

Generally, prime lenders require 2 years of NOAs for self-employed borrowers while alternative lenders may accept one year if supported by bank statements or demonstration of continuing contract work by submitting a copy of the contractors contract.

Mortgage Relevant NOA Sections

When lenders review an applicant’s NOA, they look most heavily at line 15000 which is where your total gross income (income before deductions) is stated. When underwriting a mortgage, Line 15000 is used to calculate your borrowing power:

• For salaried employees, this number should match T4 income.
• For self-employed borrowers, lenders may use Net Income (Line 23600) after business expenses.
• Alternative lenders and some B-lenders may allow add-backs (e.g., depreciation, business use of home expenses).

The RRPS deduction limit and carryforwards show the available contribution room which could affect disposable income.

The Amount Owed or Refund Due section is very important because if taxes are owed to the CRA, lenders will require proof that payments are made before mortgage approval.

Using NOAs to Calculate Borrowing Power

Lenders use NOAs to determine a borrower’s Total Debt Service (TDS) Ratio and Gross Debt Service (GDS) Ratio, which impact mortgage eligibility.

Example Calculation (Self-Employed Borrower)

• NOA (Line 15000 Total Income): $90,000
• Eligible Income After Deductions: $70,000
• GDS Ratio Limit (Prime Lenders): 39%
• Maximum Mortgage Payment Allowed: $2,275/month ($70,000 × 39% ÷ 12)

If expenses were too high and net taxable income was lower, it could reduce mortgage qualification, making alternative lending options necessary.

Don’t Have 2 Years NOAs?

If you don’t have 2 years of NOAs and you are a salaried employee or an hourly employee with guaranteed hours (as per your annualized pay stubs and Letter of Employment), that is usually not a problem unless you need to include bonus or commission income.

If you are self-employed, commission-based, or a business owner, you may need to work with an alternative lender who will accept one year of NOA plus bank statements, although most require you to have been in business for at least 2 years. The good news is they are more flexible on debt ratios and income verification.

You could also try a Stated Income Mortgage which allows self-employed borrowers to declare income. Income declared must be reasonable based on industry norms and higher interest rates will apply.

For additional support to your application, be able to prove:

• 6 to 12 months of bank statements showing deposits (please don’t co-mingle your personal and business expenses-use a separate business account)
• Contracts and invoices from clients
• Accountant’s letter verifying income consistency.

Stated Income Mortgage Programs

Alternative lenders and TD Bank offers Stated Income Mortgage Programs tailored for self-employed individuals or those with non-traditional income sources who may find it challenging to provide standard income verification documents. These programs allow borrowers to declare their income without the need for extensive documentation, facilitating access to mortgage financing.

Key Features of Stated Income Mortgages:

• Income Declaration: Borrowers state their income, which lenders assess for reasonableness based on industry standards and the nature of the borrower’s profession.
• Flexible Documentation: Instead of traditional proof like tax returns, lenders may accept alternative documentation such as bank statements, business licenses, or accountant declarations to substantiate the declared income.
• Down Payment Requirements: Typically, a higher down payment is required, often ranging from 10% to 20% or more, depending on the lender and the overall risk assessment.
• Interest Rates: Due to the increased risk associated with less verifiable income, interest rates on stated income mortgages may be higher than those of traditional mortgages.

Types of Alternative Lenders Offering Stated Income Mortgages:

• B-Lenders: These are institutions that cater to borrowers who may not meet the stringent criteria of major banks. They offer more flexible terms and are more accommodating of unique income situations.
• Private Lenders: Individuals or private companies that provide mortgage financing with flexible qualification criteria. They are often more willing to accept stated income applications but usually at higher interest rates.

Considerations When Choosing a Lender:

• Credit Score: While alternative lenders are more flexible, maintaining a good credit score can improve your chances of approval and may result in more favourable terms.
• Loan-to-Value Ratio (LTV): A lower LTV (i.e., a higher down payment) can make your application more attractive to lenders.
• Documentation: Even with stated income programs, providing as much supporting documentation as possible can strengthen your application.

Summary

A Notice of Assessment (NOA) is an official document issued by the Canada Revenue Agency (CRA) that summarizes a taxpayer’s income, tax liabilities, and refund or balance owing. It plays a crucial role in mortgage applications, particularly for self-employed individuals, commission-based earners, and business owners, as it serves as a primary income verification document for lenders. Mortgage providers, including prime lenders and alternative lenders, use the NOA to assess income stability, verify tax compliance, and calculate Gross Debt Service (GDS) and Total Debt Service (TDS) ratios to determine mortgage affordability. The most relevant section for lenders is Line 15000, which states total gross income, while outstanding tax liabilities must be cleared before mortgage approval. Self-employed borrowers typically require two years of NOAs, but alternative lenders may accept one year with additional proof of income, such as bank statements or contracts. For those unable to meet standard documentation requirements, Stated Income Mortgage Programs—offered by some B-lenders, private lenders, and TD Bank—allow borrowers to declare their income, provided it is reasonable based on industry benchmarks. While these programs offer flexibility, they typically require higher down payments (10-20%) and come with higher interest rates. Understanding how to obtain and utilize an NOA effectively can improve mortgage qualification and help borrowers navigate both traditional and alternative lending options.