Ottawa plans to spend $13 million over three years to build a direct income verification system designed to stop mortgage fraud.
The proposed system will let lenders and insurers check borrower incomes straight through Canada Revenue Agency records instead of relying entirely on applicant-supplied documents. Officials included the initiative in the federal budget to combat mortgage fraud, simplify procedures and offer greater security to financial institutions.
Mortgage fraud relies heavily on doctored paperwork like tax assessments, employment letters, and pay stubs.
“The new tool should allow us to verify information with the applicant’s consent and proper privacy safeguards,” Mortgage Professionals Canada said.
Budget 2026 Rollout
Development and testing will run through the 2027 to 2028 fiscal year pending budget and legislative approvals. The initial $13 million covers the first three years of technical setup.
Lawmakers must amend the Canada Revenue Agency Act to grant the tax agency specific authority to share verification data with approved financial institutions. Officials have not yet announced a final launch date for general availability.
Industry Consultations
The federal government first launched consultations with banks, credit unions, insurers, and mortgage brokers in 2024. A subsequent agency report flagged modified paperwork as a primary vulnerability in lending.
Industry groups stressed the importance of secure digital architecture to safeguard taxpayer data. Questions remain regarding which specific lenders will gain direct access and how brokers will fit into the portal.
Self-Employed Borrowers
Independent workers and small business owners present a unique hurdle for automated tax checks. Their tax returns often show lower net figures than current earnings due to business deductions and seasonal income swings.
Specialists emphasize that tax data must serve as just one piece of a broader underwriting review. Lenders still need to analyze total liabilities and job stability alongside direct income confirmations.
Frequently Asked Questions
Will the new system change mortgage qualification rules?
No, the portal will not alter standard lending requirements, interest rates, or maximum borrowing limits set by financial institutions. It simply streamlines how lenders verify the income data applicants already provide.
Who will pay for the system after the initial funding ends?
The federal budget outlines ongoing maintenance through industry financing agreements with participating mortgage lenders and insurers after the initial three-year government investment concludes.
What documents do applicants still need to provide?
Borrowers must continue submitting complete financial documentation while the project develops, because the system will not immediately replace all traditional paper requirements used by lenders.
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