One of The Most Challenging Yet

Rewarding Careers Is Being Able To Run Your Own Business.

However, it’s important to know how self-employment affects your ability to obtain a mortgage. With some businesses, income can be difficult to verify which can cause issues with an approval. And a small business owner usually wants to minimize taxes by expensing as much as possible resulting in a lower net income which can also be problematic.

The challenge is that banks and other prime mortgage lenders will use your average net income over the past two years as shown on your Notice of Assessments. Some lenders may allow the average to be bumped up slightly, others allow certain deductions to be added back, resulting in a higher income.

There may be other options available depending on how much equity or down payment is involved. For example, if financing is under 65% of the home value, there is more flexibility on the income requirements. Yet another option could be with alternative financing, which may not require tax documents at all, if income can be confirmed another way.

In addition to this, other documents are generally required such as the business licence, T1 Generals, GST licence (if applicable) and confirmation that personal taxes and GST is up to date.

Mortgages for the self-employed require an in-depth review but there may be options.