Mortgages for the Self-Employed
If you’re self-employed, don’t worry, you don’t have to give up the perks of being your own boss in order to become a homeowner.
Securing a self employed mortgage can be a bit more challenging, but it is not impossible.
I understand that as a self-employed person your mortgage needs are different. The main challenge really comes down to proof of income –
How much do you make?
What documents can you show to prove it?
Are you filing personal income taxes with the Canada Revenue Agency or CRA?
When you apply for a mortgage, lenders need to be confident that you make enough money and that you can afford to pay your mortgage and other debts without difficulty.
I work with lenders that offer excellent mortgage options for self-employed Canadians. These lenders understand that self-employed individuals have tax write-offs that create significant reductions in their declared income. They offer more flexibility in documentation requirements, and can help you get a self-employed mortgage with a reasonable estimate of your annual income.
Where Can I Get a Mortgage If I Am Self Employed
Self-employed Canadians can get a mortgage in two ways:
- With income validation through A lenders or traditional lenders
- With insufficient or without income validation through B lenders or private lenders
Getting a mortgage with income validation means you have proof of income.
- You have all the documents to show that you have reliable income,
- You’ve been in business for two full years,
- The business is registered as a self-employed proprietorship,
- You have a good credit score, and
- You’ve declared income on your tax returns.
You can apply for a regular mortgage with A lenders or traditional lenders, which includes credit unions and Canada’s major banks.
If you have insufficient income validation, you can’t show enough proof of income and you can’t provide all the documents required by traditional lenders.
You can still get a self-employed mortgage through B lenders or Private lenders that offer more flexibility for the self-employed. These lenders won’t ask to see the kind of paperwork that the banks would. They’ll likely look at your credit score, the value of the property, the location, and the marketability of your property. The catch though is that you may end up with a higher interest rate.
Self-Employed with Bad Credit
Being self-employed and having bad credit can make it very difficult to secure a loan from a traditional lender because of the greater chance you’ll default on a mortgage. Private lenders will help you get a mortgage even if your credit score may be bruised, if they see that your business is profitable and you have steady income.
Self-Employed with Low Income
If you’re self-employed and report low income, you can still get a mortgage loan with private lenders that specialize in low-income or even no-income mortgages. If you can show business deductions that more or less amount to the difference between your reported income and gross income, this can help increase your mortgage eligibility.
Self-Employed and Over 55
Big banks will only see that your long-term potential to earn income is smaller than it was when you were 45 or 50 and you’re less likely to be able to pay the mortgage off. I can help you find private lenders that specialize in helping those who are 55 and older get a mortgage.
The reality is that if you’re self-employed, it’s going to be difficult to get a mortgage with traditional lenders. If a bank has turned you down, I can help. As a mortgage professional, I have access to hundreds of different private lenders that specialize in helping those who are self-employed get the mortgage they deserve. Give us a call today!