Mortgages for self-employed borrowers
Jesse has firsthand experience as an entrepreneur and knows how self-employed income looks on paper. We work directly with your accountant to present your income the way lenders read it.
- Income documents lenders ask for
- Write-offs and qualifying income
- Salary, dividends and retained earnings
- Working with your accountant
Lenders usually look at two years of income
Most lenders ask for your last two years of T1 Generals and Notices of Assessment, proof that no taxes are owing, and your business registration or articles of incorporation. If you are incorporated, they usually add two years of company financial statements.
Write-offs lower the income a lender counts
Lenders generally start from the income on your tax return after deductions. Some add back certain expenses, and the rules differ from one lender to the next. Planning this with your accountant before you file can change what you qualify for.
Answers
All answersWhat documents do self-employed borrowers need for a mortgage?
Most lenders ask for two years of T1 Generals and Notices of Assessment, proof that no taxes are owing, and your business registration or articles of incorporation. If you are incorporated, they usually add two years of company financial statements.
Do my tax write-offs affect how much mortgage I can get?
Yes. Lenders usually start from the income on your tax return after deductions, so large write-offs lower the income they count. Some lenders add back certain non-cash expenses, such as depreciation, and the rules differ by lender.
Can I get a mortgage if I have been self-employed for less than two years?
Sometimes. Some lenders will look at a shorter history if you stayed in the same line of work, for example moving from an employee role to running your own business in the same field. Expect more documents and possibly a larger down payment.
Should I pay myself salary or dividends to qualify for a mortgage?
Both can count as income. Salary shows on a T4 and dividends on a T5, and lenders often average dividend income over two years. Some lenders also consider part of the retained earnings in your company, so plan the mix with your accountant before year end.
Do mortgage lenders count retained earnings in my corporation?
Some do. A few lenders will consider part of the retained earnings in your company, usually based on your financial statements and your ownership share. It varies by lender.
What is a stated income mortgage?
It is a mortgage where the lender accepts a reasonable income for your line of work instead of relying only on the figure on your tax return. These programs are mostly offered by alternative lenders, often with a larger down payment and a higher rate.