Parental Leave and Reduced Income: Mortgage Impact | Quebec

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Parental leave causes a temporary but significant reduction in household income, which can directly impact mortgage qualification and repayment capacity. In Quebec, the Quebec Parental Insurance Plan (QPIP) provides benefits that vary by plan chosen. The basic plan pays approximately 70% of insurable earnings during maternity leave (18 weeks) and approximately 55% during parental leave (32 weeks). The special plan offers 75% for 15 weeks of maternity and 75% for 25 weeks of parental leave. The maximum insurable earnings covered by QPIP are revised annually. From a mortgage perspective, lenders evaluate borrowing capacity based on actual income at the time of application. If a borrower is on parental leave, the lender will use the reduced income (QPIP benefits) to calculate GDS and TDS ratios under OSFI Guideline B-20. However, some lenders will accept pre-leave income if the borrower provides an employer letter confirming the return to work and employment conditions. This practice varies from lender to lender. For borrowers who already own and do not need to requalify, parental leave does not directly affect their existing mortgage, but it reduces the budget available for monthly payments. Proactive planning, including building an emergency fund of three to six months of payments, is strongly recommended.

Parental Leave and Mortgage: Understanding the Impact

Parental leave is an important period of financial transition for Quebec families. While the Quebec Parental Insurance Plan (QPIP) offers some of the most generous coverage in Canada, the income reduction it entails can have significant consequences for your mortgage situation. Understanding these impacts and planning accordingly is essential for maintaining your financial stability.

QPIP Benefits and Your Income

QPIP offers two plans to choose from. The basic plan pays approximately 70% of insurable earnings during the 18 weeks of maternity leave, then approximately 55% during the 32 weeks of parental leave. The special plan pays 75% for 15 weeks of maternity and 75% for 25 weeks of parental leave. In both cases, the income reduction is substantial and directly affects the debt service ratios used for mortgage qualification.

Maximum insurable earnings (QPIP): The maximum amount of employment income on which QPIP benefits are calculated. This ceiling is revised annually by the Conseil de gestion de l'assurance parentale. For 2026, consult the QPIP website for the current amount. Benefits are not increased beyond this ceiling.

Impact on Mortgage Qualification

Under OSFI Guideline B-20, lenders must use the borrower's actual income at the time of application to calculate GDS (maximum 39%) and TDS (maximum 44%) ratios. During parental leave, available income is based on QPIP benefits, which can significantly reduce the eligible mortgage amount. For example, a household with combined income of $120,000 will see that income drop to approximately $90,000 during the maternity period under the basic plan, then to approximately $76,000 during parental leave.

Proactive Planning Strategies

Complete your transactions before leave: If you plan to buy, refinance, or switch lenders at renewal, do so while both household incomes are at their full level. Pre-approvals are valid for 90 to 120 days depending on the lender.
Build an emergency fund: Save the equivalent of three to six months of mortgage payments, property taxes, and insurance before leave begins. This financial cushion will help cover the months when the budget is tightest.
Reduce your debts before leave: Pay down your credit card balances, car loans, and lines of credit as much as possible. Every dollar of monthly debt reduces your TDS ratio and can make the difference in qualification.
Explore flexible payment options: Check whether your mortgage contract allows temporarily reducing payments (interest only), changing payment frequency, or deferring a payment. Discuss these options with your lender before leave starts.

Renewal During Leave

If your mortgage term matures during parental leave, note that renewal with your current lender generally does not require formal requalification. The lender will send you a renewal offer that you can accept directly. However, if you wish to transfer your mortgage to another lender for a better rate, requalification will be required and your reduced income will be factored in. The optimal strategy is to negotiate your renewal rate and compare market offers at least four months before your term expires, ideally before parental leave begins.

Frequently Asked Questions

Do QPIP benefits count as income for a mortgage?

Yes, QPIP benefits are considered income by lenders, but at a reduced amount compared to your regular salary. The basic plan pays approximately 70% of insurable earnings during maternity and 55% during parental leave. This can significantly reduce your qualification capacity.

Can I get a mortgage while on parental leave?

It is possible but more difficult. Some lenders will accept your pre-leave income with an employer letter confirming your return and employment conditions. Others will use only current QPIP benefits. A mortgage broker can direct you to the most accommodating lenders.

How should I plan my mortgage before parental leave?

Ideally, complete any mortgage transaction (purchase, refinance, renewal) before leave begins. Obtain your pre-approval while both incomes are at their maximum. Build an emergency fund covering three to six months of mortgage payments, taxes, and insurance to get through the reduced-income period.

My mortgage renewal falls during parental leave. What should I do?

Renewal with your current lender usually does not require requalification if you renew directly with the same lender. However, if you want to switch lenders for a better rate, you will need to requalify, and your reduced income will be taken into account. Plan your rate comparison before leave starts.

Can parental leave lead to payment difficulties?

The income reduction can make monthly payments tighter. If you anticipate difficulties, proactively communicate with your lender to explore options: temporarily switching to interest-only payments, reducing payment frequency, or using payment deferral privileges if your contract allows it.