Overcome the challenges of being a self-employed homebuyer
Self Employed Mortgage
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The challenge for self-employed homebuyers
Millions of Canadians are self-employed; many financially stable, wealthy and successful who enjoy the benefits of working for themselves. But, when they begin thinking about buying a house it doesn’t pay to be self-employed as it typically becomes more difficult to get approved for a home loan.
That’s because the major banks have a limited box they lend within. They look for secure, stable and long-term employment, typically requiring at least 2 years’ of income statements to qualify. Self-employment is considered an alternative to the norm, resulting in application denial or unfavourable lending terms. So, what’s a self-employed professional to do?
Get the mortgage you deserve
Being self-employed doesn’t mean that you can’t achieve your dream of homeownership. Or, that you should have to sacrifice favourable lending terms just because of your professional status. As your mortgage broker, we don’t discriminate. Your Everything Mortgages Broker will work with you to develop a self-employment strategy that will allow you to get the mortgage you actually want and deserve.
We work with lenders who understand the unique challenges self-employed Canadians face. They understand these individuals have tax write-offs creating significant reductions in their declared income. We can use your gross deposits and work with as little as 6 months of you being self-employed to qualify. If you think you don’t have options as a self-employed borrower, think again.
Frequently asked questions
Who is a self-employed borrower?
You! If you’re a contractor, consultant, freelancer or entrepreneur who collects invoices rather than employment pay stubs, you are self-employed. Technically, “self-employed mortgages” don’t exist. You will get approved for the same mortgage as everyone else but, you may have to jump through a few more hoops compared to a payroll employee.
How can I qualify as a self-employed borrower?
The primary difference between self-employed (or commission-based) and salaried employees is that lenders will treat your gross earnings differently. As a rule of thumb, lenders will only use 80% of your gross earnings and the average of last tax year’s income for commissioned sales people, and net income, instead of gross income, for self-employed individuals. `A lender is restricted by Canada Mortgage and Housing Corporation (CMHC) rules to use only the last three years of self-employment income.
What is considered qualifying income?
Self-employed workers typically obtain their mortgage through stated income applications, which require a signed income declaration and proof of self-employment. Stated income is how much you claim to earn. If you keep most of your income inside your company, we can qualify you for a mortgage using the gross deposit of business income over the last 12 months or allowing for retained earnings within your corporation. We can even qualify you with some lenders with as little as six months as business for self.
What income documents will I need?
Lenders will require: Your last two years of full T1 Generals and the associated notices of assessment
If incorporated: your whole articles of incorporation
If sole proprietor: your business or HST registration
Last six months of bank account statements
How long do I need to be in business to qualify for a mortgage?
Most lenders require at least a two-year track record for businesses. Lenders have been known to make exceptions for professionals like doctors and engineers, as well as people starting a new business in an industry where they’ve already had a long career.
If my business produces a seasonal or irregular income, can I still qualify?
Yes, the same income requirements apply as if you earned a full-year income.
Where should I start?
If you are a self-employed individual looking for a mortgage, it would be in your best interest to gather the required income documents and begin a mortgage pre-approval process with us. Contact us to speak with one of our self-employed mortgage specialists to help you organize and obtain the relevant documentation for you. Our digital document collection process simplifies the process, making getting pre-approved as hassle and stress free as possible. Click the "Get Started" button to start your online application.
How can you use a second mortgage?
What Our Customers are Saying…
My experience with Everything Mortgages was excellent. My mortgage broker was very knowledgeable, professional, and personable. Also, the process was smooth and uncomplicated. I would recommend Everything Mortgages for any type of buyer, new or seasoned, residential or commercial.
Manzeel and his team at Everything Mortgages are fantastic! Buying a house can be quite an ordeal but these guys made it stress free and painless. Not only did they take the time to answer all the questions I had but they were also respectful and diligent in keeping me informed through out the closing process. They were mindful of my time and worked around my schedule. It was an excellent experience from end to end. I highly recommend them for anyone in need of a mortgage. Thanks Manzeel and team!
My experience with Everything Mortgages was excellent. Manzeel and his team are best in class. They were very professional and really simplified the process for me. I would recommend Everything Mortgages for everyone!
I’ve personally dealt with Everything Mortgages for years now and they have done many transactions for me (purchases and refinances). They are competitive, tech savvy, and trustworthy. I highly recommend them for all your mortgages needs.
Manzeel and his team are amazing. They get it done! They assist our clients in the most challenging situations and more importantly they have the patience and dedication, with a never quit attitude!