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Mortgages for the Self-Employed


        You work very hard for your money and when it comes to paying taxes  you want to keep as   much as you can by writing off as much as possible.  This benefit of being self-employed can   make getting a mortgage more difficult because the inability of proving what your actual income is. 

What documentation is required

To start, income and down payment documentation for the self employed  usually requires 2 years of notice of assessments (NOA) from CRA, proof you do not owe taxes and the history of where the down payment is coming from.  The lender will then average those two years income for use in qualification of the mortgage you are applying for.  Lenders do allow the income to be "grossed up" or certain "add backs" but if you have been good at deductions you may have trouble getting that mortgage you deserve because of your claimed "total income".  Other documentation that may be required is current business license, articles of incorporation or current running bank statements.

As little as 5% down

CMHC allows self employed Canadians to buy a home with as little as 5% down (requires 3rd party validation of income) and if you cannot prove your income, the minimum down payment is 10% of the purchase price.  If you do not have two years proof of owning your own business you can use your employed history but it must be in the same industry that you are now self employed.  This mortgage product is really ideal for a new business owner that  has owned the business for 3 years or less, and finds it difficult to prove income.  This is not for business owners that have had years of running a business but  write off income excessively to avoid paying tax. 

When you own your own business the required documentation to qualify for a mortgage is more in depth than just a pay stub and job letter.  A mortgage broker will help you arrange the best loan  for your needs and guide you through the process.  This saves you time and money and lets you work on what you do best and that's building your business.