Statistics show that nearly 20% of all income earners in Canada are now self-employed. This is a large and growing demographic, which brings up the question, “Why is it so difficult to get a mortgage through a chartered bank if you’re self-employed?” That’s because many business-for-self owners fully utilize their allowance for expenses in lieu of extra income, something most banks will not recognize.
As an independent broker I completely understand this situation and have access to many lenders that offer mortgage products that work for those individuals with your own business.
In order to obtain a self-employed mortgage, most lenders require that personal tax Notices of Assessment from the past 2 years be included with the mortgage application. Those who are able to provide this proof of income can generally access the same mortgage products and rates as traditional borrowers, while those who cannot must at least have a good credit history and provide a minimum down payment of 10%.
In addition to your Notices of Assessment, some of the other supporting documentation a lender may require for a self-employed mortgage application include:
- Two years T1 General statements
- Financial statements for your business.
- Your personal and business credit scores.
- Proof that your down payment has not been gifted