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Self-Employed Mortgages

The number of self employed and sales commission individuals in Canada continues to grow rapidly forcing the mortgage industry to adapt. There are now a number of programs available to better meet the needs of customers who do not qualify under the traditional lending guidelines.

Traditionally, two years of tax returns (full T1’s) are required from self employed individuals for an average income to be calculated. This income may also be grossed up by 15% in some situations. If you are able to provide a two year average and your average income is high enough to qualify for the home you are hoping to buy, than no specialty self employed program will be required.

If however the self employed income on your tax returns is not enough to qualify for the home of your dreams, as is the case for many self employed individuals, you may have the option to use a self employed simplified/low doc product. Lenders and insurers alike understand the goal when completing a self employed tax return is often to write off as many expenses as possible in order to produce a lower income and therefore lower taxes. This is why you may be allowed to self declare your income. As long as lenders can in some way verify that the amount of income being declared is reasonable for your industry, and you have been in the industry for a minimum of two years, the self declared amount will be used for qualifying purposes. It is important to note however that with this product any mortgage insurance premium added to your mortgage, may be increased beyond that of a traditional mortgage.

Q: What if I am newly self-employed?

Even if you are freshly self-employed you may still be able to qualify if you have either been in the industry previously or have a larger down payment.

Please feel free to contact us for further details or to see if one of the above options may be a fit for you!

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