A Salary Step and What It Changes for Your Mortgage

A step up the grid is current income, so a lender uses the salary in your new employment letter, not last year's T4. At renewal with the same lender you usually do not requalify, so the step does not change that signing. The raise matters most when you borrow more or switch lenders, where the higher salary can lift what you qualify for.

Key takeaways

• The salary in your current employment letter is the income a lender uses; last year's T4 is a check, not the ceiling.
• A renewal with your current lender usually needs no requalification, so a step does not change that signing by itself.
• Switching lenders is a new application, and that is where the higher step can help.
• The qualifying rate in these examples is 6%, from a 4% contract rate plus 2 percentage points.
• Ratios cap the file at 39% GDS and 44% TDS, so debts still set the limit.

A step is real income, and a lender uses the new letter

A step up the grid is income a lender can use right away. The number that matters is the salary on your current employment letter, set by your QECO category and your experience step for the 2025-26 school year. That is the figure the file is built on.

Last year's T4 is a check, not a ceiling. A lender looks at it to confirm the pattern of your pay, then uses the current grid placement for the income calculation. A permanent teacher on a published board grid has a salary that is set in the collective agreement and moves on a known schedule, so the new, higher step is the one that counts.

Across the published board grids for the school year, start of grid runs from $48,179 to $61,614, and the top of category A4 runs from $119,967 to $120,384. Your exact salary sits somewhere on that path, set by category and step. See The Ontario teacher salary grid, explained for how the steps work.

The one letter that matters: The employment letter stating your current salary and permanent status does the work. The step you are on now is the income, not the step you were on last year.

What a raise does and does not do at renewal

A renewal with your current lender usually needs no requalification. You are not reapplying, so the lender is not rerunning your income against the ratios. The step is real, but it does not change that signing by itself, and a higher salary will not reprice the offer in front of you.

Switching lenders is a different thing. A switch is a new application. The new lender qualifies you from scratch, and that is where the higher step shows up, because the current salary letter goes into the calculation.

Where the raise actually moves the number

The renewal letter from your current lender is a quote, not a verdict. Before you sign it, see Your renewal letter, and why teachers should not sign it, and See if you can do better on your mortgage to compare a switch.

• Renewing and borrowing more at the same time, where the lender tests the new total against your income.
• Switching to another lender, which is a fresh qualification on the current salary.
• A new purchase, where the step sets what you can carry.

What a higher step qualifies for

Here is what the step does to the number. These are illustrative maximum mortgage amounts from the site affordability model, over 25 years, with a 4% contract rate tested at 6%, which is the contract rate plus 2 percentage points. They assume $250 a month in property tax and $100 a month in heat, with no other debts and then with $500 a month in other debt.

Read down the column and the mechanism is clear. More income lifts the ceiling, and at the lower grid points a $500 monthly debt pulls the number down hard. At start of grid on the lowest published board, that debt takes the maximum from $190,029 to $143,256. At the top of A4 the two columns sit almost on top of each other, because the income is large enough that the same $500 barely moves the result.

The ratios are the gate. A lender caps the file at a 39% GDS ceiling and a 44% TDS ceiling. A step raises income, which lifts both ceilings in dollars, but a new car loan or a line of credit balance eats into the same room, which is why the debt column lands so much lower at the lower steps.

The qualifying rule is the contract rate plus 2 percentage points, or 5.25%, whichever is higher. In these examples the contract rate plus 2 lands at 6%, above the 5.25% floor, so 6% is the rate used. A lender runs your actual numbers: the exact grid salary in your letter and your real debts.

• 6% Qualifying rate in these examples (4% contract rate plus 2 percentage points)
• 39% GDS ceiling
• 44% TDS ceiling

When to act on it

Act in your renewal window, and do not sign the first letter. The step will not change a straight renewal with your current lender, so the reason to move is the rate and terms, which a switch can test. Line up the comparison before the current term ends so there is no gap.

What to bring

If you are switching or borrowing more, that is when the step earns its keep, because the higher salary goes into a fresh qualification. If you are simply renewing on the same terms, the step is still worth confirming in the file, so the current income is on record for the next time you borrow.

• A current employment letter showing your salary and permanent status on the grid.
• A recent pay stub that matches the letter.
• Your most recent T4, used as a check against the letter.
• A list of other monthly debt payments, since these set your TDS room.
• The renewal letter from your current lender, so a switch can be compared against it.

Order of operations: Get the current letter first, then compare the renewal against a switch, then decide. The step is real income the moment the letter states it.

Sources and dates

Figures in this guide come from the sources below. Each entry shows the date the source published it, or the date it was accessed when the source does not state one. After the review date, treat any number as a starting point and check the source.

• OECTA York Catholic unit collective agreement 2022-2026 (Art. 6.01) (as of 2025-26)
• OSSTF District 25 (OCDSB) collective agreement 2022-2026 (as of 2025-26)
• ETFO Durham teachers salary grid 2022-2026 (as of 2025-26)
• ETFO York Region local collective agreement 2022-2026 (as of 2025-26)
• OSSTF Toronto (TTBU) collective agreement 2022-2026 (as of 2025-26)
• OSSTF District 16 (YRDSB) collective agreement 2022-2026 (as of 2025-26)
• OSFI, minimum qualifying rate for uninsured mortgages (as of 2026-01-29)
• CMHC, mortgage loan insurance for homeownership: debt service ratios (as of 2026-08-26)

Common questions