Self-Employed Mortgages – Kelowna, BC

For self-employed Canadians, providing 2-3 years of documentation (tax returns / notice of assessment) from Revenue Canada to confirm business income is the best scenario for mortgage lenders to approve your mortgage financing.

As a self-employed individual, if your notice of assessments doesn’t reflect the income needed to qualify for your desired mortgage, there’s an alternative route. You may still get approval by making a higher down payment of 10%, provided you have a strong credit score.

To secure approval for a self-employed mortgage, you will need to provide the following documentation:

T1 General tax returns with attached statements of business activities, covering a minimum of two years. These must be prepared by an independent third party.

Audited financial statements for the two most recent years, which should be prepared and certified by a chartered accountant.

Notice of assessments from Revenue Canada for the past two to three years to confirm your income and ensure there are no outstanding tax liabilities.

Anyone who applies for a mortgage when self-employed, whether to private mortgage lenders or other financial institutions, could be required to provide the following:

1. Proof of full payment for HST and/or GST.
2. Business license and articles of incorporation.
3. Financial statements and bank statements prepared by an accountant.
4. Confirmation of your status as a principal owner in the business.
5. Contracts with clients indicating anticipated revenue for the upcoming years.
6. Personal and business credit scores.
7. The down payment in cash.

Some lenders may allow you to add back some tax deductions to your income, such as car expenses, advertising, capital cost allowances and housing expenses. Other lenders will simply allow a 15% add-back to account for these expenses.

Some lenders will offer insured “stated income” mortgage products, specifically designed for self-employed borrowers. In order to qualify for a stated income mortgage, you will need to take out your own mortgage loan insurance with a private mortgage default insurer, as the CMHC does not provide mortgage default insurance for these types of mortgages. Stated income applications also require:

1. Minimum 10% down payment
2. Minimum 2 years of self-employment
3. The borrower is required to declare their annual income and annual business revenue, which should be reasonable based on the industry, length of operation, and type of business
4. Business to be verified by an arm’s length third-party
5. At least one borrower should have minimum credit bureau score of 680
6. No previously bankruptcies
7. Minimum 2 trades showing on credit bureau for minimum of 2 years
8. No revolving, or installment delinquencies on credit bureau for 12 months
9. Owner-occupied properties only

Interest rates offered for self-employed borrowers are the same as a regular borrower. To ensure you secure the most favorable rates, you will have to show a robust credit history and present thorough documentation of your self-employed income. 

Collaborating with a seasoned Kelowna mortgage broker who specializes in self-employed applications can be invaluable in finding lenders that offer competitive rates customized and mortgage solutions to fit your unique circumstances.