How to qualify for a mortgage in Canada if you’re self-employed

Buying a home when you’re self-employed can be tough. Even though 1 out of every 5 income earners in Canada is self-employed, it’s still challenging for this demographic to get a mortgage.

The biggest hurdle is proving income. When you’re employed with someone else, it’s easy to show your T4 or a recent pay slip. When your income changes from month to month, however, and comes from multiple sources, lenders tend to be a bit more wary.

That doesn’t mean it’s impossible to get a mortgage while self-employed though. You just need to work smart and use the available tools.

The easiest way is to use Notices of Assessment for the last 2 years. This is the report Canada Revenue Agency sends you after they review your tax return. If you have this, you can access virtually all the same mortgages as conventional homebuyers.
If you can’t get your Notices of Assessment, then make sure you have a good credit history and be prepared to pay at least 10% for your down payment.

Whichever route you take, try to include other supporting documents. They can go a long way to making a difference and may even speed up the process. Some examples of such documentation include:

  • Audited financial statements for your business
  • Proof that your HST and/or GST is paid in full
  • Contracts showing expected revenue for the coming years
  • Your personal and business credit scores
  • Proof that you are a principal owner in the business
  • Proof that your down payment has not been gifted

If you have any questions, please contact us. We help employed people all the time find the perfect mortgage for the perfect home. We’d love to help you to.

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