Qualifying for a mortgage while you're self-employed

1. CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA
QUALIFYING FOR A
MORTGAGE WHILE YOU’RE
SELF-EMPLOYED
By Jackie Woodward at Mortgagegirl.ca

2. CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA
Self-Employed Mortgages
There is no denying that the mortgage borrowing landscape is changing.
One of the product lines that saw repeated revisions was the self-employed
mortgage niche. In the mortgage world, you are self-employed if you
own a portion or all of the business you derive your income from. Selfemployed status can also include contract employees who don’t have
their taxes and benefits deducted by the employer they are under contract
with for their services.
There is a marked difference between now and three years ago when it
comes to qualifying for a mortgage if you are self-employed. If your
mortgage is up for renewal you can avoid re-qualifying altogether by
simply renewing your mortgage with your current lender though if you’re
purchasing and obtaining a new mortgage or refinancing by adding more
funds to your existing mortgage, you can expect the mortgage process to go
as outlined on the following slides;

3. Self-Employed Mortgages
¨
Income
Confirmation
When looking for a mortgage, the majority
of lenders are able to look at selfemployment income in two very different
ways: “stated income” or “verifiable
income”. If you’ve been self-employed for
longer than 2 years and your income
taxes with the government are current, we
can verify your income amount via your
most recent 2 years personal earnings
history which is documented by your Notice
of Assessments or Income Tax Returns.
CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA

4. Self-Employed Mortgages
¨
Income
Confirmation
Continued
If you have been self-employed for less
than 2 years or cannot verify your income
via traditional methods, you are now a
“stated income” borrower. This simply
means we can “state” a qualifying income
that is reasonable for your line of work. By
viewing your income this way, you may be
able to qualify for a higher mortgage
amount than if we had to use your actual
paper income that you declared to the
government and paid personal taxes on.
CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA

5. Self-Employed Mortgages
¨
Income
Confirmation
Continued
The requested documentation to support
your self-employment varies depending on
your income type and the lender you are
applying with. For instance, different
documentation is required if you have an
incorporated company versus if you are a
sole proprietor. When you are applying
for a mortgage under a “stated income”
mortgage program, don’t be surprised if
your approval is accompanied by higher
rate, extra fees or even a larger
downpayment.
CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA

6. In order to qualify to purchase a property with the minimum 5%
downpayment, you cannot state your income as you need to have verifiable
and documentable income along with a good credit history in order to meet
the minimum downpayment requirement of the 5%.
If you have no choice but to “state” your income in order to qualify for a
mortgage, you have to provide a minimum 10% downpayment and also have
good credit to get best rates.
If you have or have had any credit issues and your income cannot be verified
the traditional way, expect to provide 15% – 25% downpayment in order to
qualify for a mortgage. And depending on the lender, some require your
downpayment be from your own resources as it cannot be borrowed or gifted.
This is when I strongly recommend you speak to a mortgage professional who
is experienced in self employed borrowings about the options available to
you.
DOWNPAYMENT
CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA

7. DOCUMENT REQUIREMENTS
When you are applying for a mortgage while self-employed, your income
confirmation requirements vary depending on your specific employment details
as follows:
¨ Notice of Assessment: This Canada Revenue Agency document confirms
your personally declared income; it is predominantly used to determine if
you owe outstanding personal taxes. For some lenders this is a mandatory
requirement for all self-employed borrowers though other lenders may
allow alternative income tax confirmation.
¨ Business Financial Statements: These would be required if you earn your
income from an incorporated company you own all or a portion of. The
business financials allow us to determine most importantly if the business is
sustainable going forward. They also allow us to see if you have any noncash expenses we may be able to “add-back” into your verifiable income
which will help you to qualify for a higher mortgage amount.
¨
CONTINUED ON NEXT PAGE
CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA

8. DOCUMENT REQUIREMENTS
¨
¨
¨
Proof of Self-Employment: You will be asked to confirm your self-employment
status and there are numerous acceptable documents to do so, including:
Articles of incorporation for your business
Business license
GST return
Talk to your favorite mortgage professional about alternative self-employed
status confirmation documents
Tax Returns or T1 Generals: These detailed personal income tax documents can be
used to confirm the self-employment earnings and expenses of a sole proprietor as
well as to determine what other types of income you earn and pay taxes on in
addition to employment income.
Personal and/or business bank statements: Some lenders request 3, 6 or even 12
months bank statements to confirm reasonability of the income stated on the
application as they want to see the deposits going into your accounts.
CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA

9. Qualifying for a mortgage when you’re self-employed can
be tough though you can make the process a bit easier on
yourself by working with a mortgage professional who has
experience in obtaining mortgage approvals for selfemployed borrowers. Since these types of products have
guidelines that vary depending on your type of selfemployment and how long you’ve been in the business, it is
imperative that the person you choose to work with knows
what options you are eligible for.
Stay on top by picking a mortgage solution that is
affordable for you!
CONTACT JACKIE WOODWARD AT 780.433.8412 OR INFO@MORTGAGEGIRL.CA

10. CONTACT US
JACKIE WOODWARD, MORTGAGE BROKER
PHONE: 780.433.8412
EMAIL: INFO@MORTGAGEGIRL.CA
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