How is the Mortgage Process Different for Self-Employed Canadians?

Owning your own business brings many rewards: independence, flexibility and the pride of building something on your own. But when it comes to getting a mortgage, self-employed Canadians often find the process a bit trickier. We know the unique challenges faced by self-employed clients—and we’re here to make it easier. Let’s walk through what makes the mortgage process different for self-employed Canadians and how you can navigate it confidently.

Proof of Income: More Than a Pay Stub

For salaried employees, verifying income is as simple as handing over a recent pay stub. For self-employed borrowers, it’s a different story. Lenders want to see a stable income, which usually means providing at least two years of personal and business tax returns, Notices of Assessment from the CRA and sometimes business financial statements. This helps lenders understand your true income and ability to repay the mortgage.

If you’ve recently incorporated your business, expect to provide corporate financials too. Remember, it’s about painting a full financial picture. Need help getting organized? Our team can guide you through the documentation process, making sure you’re presenting your best case to lenders.

The Importance of Declared Income

One challenge for self-employed Canadians is that many aim to reduce their taxable income for tax purposes. While that’s a smart tax strategy, it can sometimes work against you when applying for a mortgage. Lower declared income can make it harder to qualify for the loan amount you need. That’s why it’s crucial to balance tax planning with future borrowing needs. We can help you understand how your declared income affects your mortgage options.

Down Payment Requirements

While the standard minimum down payment in Canada is 5% for a home under $500,000, self-employed borrowers might find that lenders prefer a larger down payment, especially if income is less predictable or harder to verify. A down payment of 10% or more may improve your chances of approval and give you access to better rates. It’s another way to show lenders that you’re financially responsible and committed to the investment.

Additional Documentation

Beyond proof of income, lenders may ask for additional documents. These can include proof of business ownership, GST/HST registration, client contracts or invoices, and even a business license. Each lender has its own requirements, so working with a mortgage broker like us can help you navigate these requests efficiently.

Work with a Mortgage Broker Who Understands Self-Employed Clients

Navigating the mortgage process as a self-employed borrower doesn’t have to be overwhelming. A mortgage broker experienced in working with self-employed clients can help you identify the right lenders, gather the right paperwork and present your application in the best possible light. We specialize in helping self-employed Canadians achieve their homeownership dreams, guiding you every step of the way.

If you’re self-employed and thinking about buying a home, refinancing or renewing your mortgage, let’s talk. We’ll work together to create a plan that fits your unique situation and helps you get the mortgage you deserve.