Self-Employed Borrowers
 

Mortgage Solutions For Self-Employed Borrowers.                                   

We can find you the best mortgage financing even if you claim little income on your personal taxes.
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How Long Do You Have To Be Self-Employed To Get A Mortgage​
Different Canadian mortgage lenders cater to different types of self-employed borrowers.  Depending on your financial situation, credit score, length of time you've been self-employed and the income amount you have claimed on your personal taxes, your mortgage will end up with either an A, B or C lender. 

“A” lenders are considered prime financial institutions, and include major banks, credit unions and "Mono-line" lenders, meaning federally regulated financial institutions that don't have a storefront and are not deposit-taking corporations.   "A" lenders offer the best interest rates and most competitive mortgage terms.

“B” lenders are considered alternative mortgage lenders. They are still banks, credit unions, etc., but their "Alt" financing is offered through their alternative lending divisions, instead. Therefore,  "B" lenders are still regulated financial institutions and still provide competitive financing rates and terms within their respective mortgage space. Because alternative lenders approve borrowers who, for whatever reason, were not approved on the "A-side", therefore increasing their exposure to risk, their interest rates tend to be higher and usually the mortgage approval comes with a lending fee. Some reasons borrowers may approach "B" lenders include having bruised/limited credit, and have not been self-employed for at least two years, and little to no claimed income on personal taxes. 

“C” mortgage lenders are considered private lenders. Private lenders include individuals and corporations who do not adhere to specific lending guidelines and are not regulated by the Federal or Provincial Governments.  Private lenders usually only consider available equity or downpayment as their approval criteria instead of the standard credit strength, employment history, etc. 

Qualifying For A Mortgage With Prime Lenders If You’re Self-Employed 

To qualify for a mortgage with a prime lender if you're a self employed borrower will require that you possess "qualifiable" income, meaning you must claim enough on your income taxes to afford the proposed mortgage payments. You also must meet the standard credit criteria. 

Some prime lenders do offer programs that consider stated income (closer to gross income) instead of qualifiable income (what is claimed as net income as per Line 150 of your Notice of assessment). Still, you must have a credit score of at least 680 and be able to prove you've been self-employed for at least two years. To find out more about Stated Income Programs, call us today. 

Nevertheless, all prime lenders require that self-employed borrowers complete the last two years’ worth of income taxes with no outstanding tax arrears. 

To qualify, you must have: 

• 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.
• A copy of your borrower’s business or GST licence or Article of Incorporation showing you are licensed.
• Proof that your down payment has not been gifted. ​

Qualifying For A Mortgage With Alternative Lenders If You’re Self-Employed
To qualify for a mortgage with an alternative lender, it is not required that you have been in business for at least two years nor do you require standard "qualifiable" income as stated above. Alternative lenders can use other forms of income to help you qualify, including bank statements, invoices and contracts.

If you're purchasing real estate, you will require a down payment of at least 20 percent in order to qualify with an alternative lender or if refinancing, you will require at least 20 percent of your property's value in available equity. 
Qualifying For A Mortgage With a Private Lender If You’re Self-Employed ​
Private lenders do not need to verify income or credit, even though they will still need a copy of your credit report and mortgage application. Instead, they will  rely on the amount of down payment you have or available equity, if refinancing, for example.

What Banks Require For A Self-Employed Mortgage
Most banks require self-employed borrowers to have the following: 

1. Excellent credit history.
2. Income Tax Documents for the last two years together with their T1 Generals that includes the Statement of Business and Professional Activities.
3. Sufficient income claimed on Line 150 of their Notice of Assessments in order to qualify for the best interest rate and support the amount of mortgage loan they require.
4. Have had to been in business for at least 24 months in order for your income to qualify.

What If You Don't Claim Enough Business Income To Qualify For Financing
You can be sure that if you're self-employed, and meet the above-criteria, we can help you with mortgage financing as there are many different products and programs available. We can find you the right match!

Business For Self Stated Income Program.
We also offer stated income programs which are available through Canada Mortgage and Housing Corp. and Canada Guaranty. Under the stated income program, income is based on "reasonability" and not on what is claimed on income taxes. Usually only a Notice of Assessment is required for the past one year to show there are not any outstanding income taxes owing to the Canada Revenue Agency. 
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• Stated income programs are available for purchases with as little as a 10 per cent down payment. 
• Commissioned Sales People DO NOT qualify. See below. 

If stated income programs are not possible, we also offer alternative loans which do not require income documentation but can rely on other means of verification such as bank statements, contracts, invoices, etc. We also offer extremely competitive mortgage interest rates. 

If you are refinancing your property, we can work with you to obtain a home equity loan with minimal income verification. Start your mortgage application today. Call me directly at 519-533-7448 or Apply Online.

If you'd like me to contact you before your mortgage renewal to discuss rates, please fill out the form and I will get in touch with you.