How Modernizing Income Verification Rules Could Help Address Canadian Housing Concerns

One major function of the Canadian Real Estate Association (CREA), beyond serving our REALTOR® members, is to act as the national driving force for housing advocacy. Not just for a few people, but for everyone; from supportive housing for those that need it most, to attainable and affordable ownership options. 

It’s important to CREA and our REALTOR® members that in Canada, anyone who wants to own a home one day has a path to achieve that goal.

As part of our advocacy efforts, we submit a pre-budget submission every year to the federal government as they prepare their annual budget—a document that guides what initiatives the country will be funding for the upcoming year. It’s an important part of our work; and it’s also something all REALTORS® should know about. 

In CREA’s latest submission, we outlined five recommendations the federal government could implement to help create a more attainable path to homeownership. One of them? Modernizing income verification rules to reflect how Canadians actually earn money. 

When qualified borrowers cannot buy a home because of rules that haven’t kept pace with changes in the workforce, the pressure does not disappear—it shifts into the country's already tight rental market. Modernizing these rules would cost the federal government nothing to implement but could open attainable ownership to thousands of otherwise qualified Canadians.

Read on to learn more about what that means, and how, if implemented, it could help your clients (and your business). 

Ok, so now that you’ve read the recommendation, what does it mean? 

Historically, underwriting standards have been built around a single-employer, salaried model of income. That’s no longer an accurate reflection of the on-the-ground realities for many Canadians, particularly younger generations. 

In 2023, 2.7 million Canadians (13.2% of the employed population) were self-employed, and more than one in four of them (26.6%) were gig workers as their main job. A growing share of prospective borrowers, including contractors, small business owners, and gig or platform workers, earn income from multiple, variable sources. 

Despite these changing social norms, non-salaried borrowers are still often treated as inherently higher risk regardless of the stability or total value of their income, simply because it does not live inside Box 14 of a single T4 slip. 

That is where modernizing the income verification rules comes into play. 

How to close the attainability gap

There’s a gap between groups, but it’s not beyond repair. To mend it we need clearer, modernized rules. Here are the two suggestions that CREA submitted. 

1. Provide explicit, flexible standards for verifying and blending income. 

The consolidated Credit Risk Management (CRM) Guideline should set clear principles for assessing creditworthiness, rather than leaving this to inconsistent institution-by-institution interpretation, including: 

• income earned through personal or professional corporations where that income is recurring; 
• independently verifiable; and 
• demonstrably available to the borrower. 

2. Protect well-governed underwriting exceptions.

An exception does not necessarily mean a loan is risky; it may simply reflect a borrower whose finances are sound but who does not fit a standardized documentation model. OSFI should support transparent, well-documented, risk-based exceptions, rather than expectations that push institutions to treat non-standard income as inherently unreliable. 

Here’s the key message 

The impact of this gap has little to do with creditworthiness, and more to do with an outdated system operating in an evolving labour market. It’s not just an underwriting issue, but also a broader housing continuum issue—when otherwise qualified borrowers cannot buy because of this gap, the pressure does not disappear, it shifts into an already-tight rental market.