If you’re trying to get a mortgage but haven’t filed your taxes—don’t panic. This happens more often than you’d think. I’ve helped dozens clients in this exact situation, and there are ways to move forward.
1. File Your Taxes—Even If You Can’t Pay Yet
Let’s be honest—filing old tax returns isn’t most people’s idea of a fun weekend. But the sooner you get it done, the sooner we can get moving.
Lenders need to see that your taxes are filed, even if you still owe money.
- If your taxes are simple, use a service like TurboTax.
- If they’re more complex (multiple years, self-employment, etc.), hire a chartered accountant. I have a trusted network of professionals who make the process easier and ensure everything is done right.
Why it matters:
You need your T1 return and CRA Notice of Assessment to get approved for most mortgage types.
💡Paul’s Pro Tip:
You can still owe money and get conditionally approved for a mortgage—as long as your returns are filed.
2. Refinance If You Already Own a Home
If you’ve got at least 20% equity, refinancing could give you the funds to pay off CRA directly and get back on track.
- The mortgage lawyer can send funds to CRA on your behalf.
- Expect:
- Legal fees
- Possible prepayment penalties
This strategy helps you clean up your CRA balance and protect your credit.
3. Clear Your CRA Balance with a Loan or Line of Credit
If you can’t refinance or don’t own property, consider a consolidation loan or line of credit to pay off your CRA balance.
- Use the loan funds to pay your outstanding taxes in full.
- This shows lenders you’re in good standing and improves your chances.
- Loans and lines of credit offer lower interest rates than credit cards.
No, it’s not glamorous—but neither is explaining to a lender why you still owe the government from five Aprils ago.
4. Gather What Lenders Will Ask For
Even with filed taxes, most lenders will ask for:
✅ Recent T1 Personal Tax Return
✅ CRA Notice of Assessment
✅ Proof of income (e.g. pay stubs or business invoices)
✅ Government ID and proof of down payment
If you’re self-employed, also expect:
- Past 2 years of business income
- Possibly a letter from your accountant
💡 Paul’s Pro Tip:
Having some documentation ready (even if not perfect) shows lenders you're serious.
5. Consider Professional Guidance
These steps can be handled on your own, but if you feel stuck, talking to a mortgage advisor or accountant can save time and stress. Many lenders appreciate seeing that you’ve worked with a professional.
Conclusion: One Step at a Time
Being behind on taxes doesn’t mean your mortgage plans are over. It just means you need a strategy.
✅ File your returns (even if you owe)
✅ Know your refinance and loan options
✅ Ask for help—it’s what we’re here for
You don’t need colour-coded spreadsheets and a 900 credit score to move forward. Just take the next right step. We’ll help with the rest.
About the Author
Paul Hudson is an award-winning mortgage broker with over 20 years of experience helping homebuyers in British Columbia secure the right mortgage for their dream home.
