Self-Employed Mortgage in Canada: Rates, Requirements and Which Lenders Say Yes
Write-offs that save you tax cost you mortgage. Lenders in Canada read business-for-self income very differently from one another, and which one reads yours generously decides the whole file.
Who a self employed mortgage covers
- Sole proprietors, incorporated business owners and commissioned contractors
- Anyone whose line 15000 understates what the business actually earns
- Buyers turned down by a bank that would only look at two years of NOAs
What lenders look for on a self employed mortgage file
| Two years of T1 Generals and Notices of Assessment | The default at every A lender. They average line 15000 across two years and lend against that number. |
| Add-backs | Some lenders will add back capital cost allowance, business-use-of-home and one-time expenses. Others will not. This alone can move qualifying income by 20% or more. |
| Stated income | For borrowers who can show the business is real — bank statements, invoices, a GST return — without the tax return supporting the income. Priced above prime and usually capped at 80% loan-to-value. |
| Corporate add-back of retained earnings | If you leave money in the company, a handful of lenders will count a share of it. Most will not. |
Self-Employed mortgage rates: what it costs
Self-employed files that document income conventionally price on the normal shelves. Stated-income files sit on the uninsured shelf and typically run 50 to 150 basis points above the board.
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Self-Employed by province
Land transfer tax, minimum down payment and typical prices differ by province.
How three tiers of lender read self-employed income
Nothing is wrong with your file. The difference is entirely in how each tier is willing to read income that does not arrive as a salary.
| A lender | B / alternative lender | Private lender | |
|---|---|---|---|
| What they count | Line 150 on two years of filed returns, often averaged. Write-offs cut your income. | Business bank statements, contracts and invoices alongside the returns. | Mostly the equity in the property. |
| What they need | Two years of filings, notices of assessment, and no outstanding balance with CRA. | A business that is clearly operating and some history behind it. | Equity, and an exit. |
| Relative cost | Lowest. | Higher, plus a lender fee in most cases. | Highest, and short-term by design. |
| Best for | A business owner who takes a steady salary and does not write much down. | Somebody whose returns understate what the business really earns. | A time-limited problem — a tax balance to clear, a purchase to close — with a plan to refinance out. |
Writing less off for two years before you buy is the cheapest thing a self-employed borrower can do. It costs tax and it buys qualifying income.
Self-Employed mortgage questions
How long do I need to be self-employed?
Two years is the standard, evidenced by two Notices of Assessment. Some lenders will look at a shorter history if you were previously employed in the same field — moving from salaried electrician to incorporated electrician is a much easier story than a career change.
Can I get a mortgage on stated income?
Yes, though not from a big bank at a posted rate. Stated-income programs exist at several monolines and alternative lenders, usually needing 20% down, a clean credit history and evidence the business is genuine. Expect to pay for it in rate.
Do I need to stop writing off expenses?
Not permanently, but the two years before you buy matter. Reducing write-offs raises your reported income and your tax bill — worth modelling both, because the extra tax is sometimes cheaper than the worse mortgage.
Will applying hurt my credit score?
A single mortgage enquiry has a small, short-lived effect. Several lenders pulling your bureau separately over weeks is worse than one broker pulling it once and taking that file to several lenders.
How long does this usually take?
A straightforward file takes a few weeks from application to approval. Alternative and private lending can move faster because less is being verified — sometimes days.
Have a self-employed file looked at
When you are ready to do something with these numbers, we will introduce you to a licensed broker who can put the file in front of lenders. Nothing here obliges you to.
