Self Employed Get GREAT Mortgage Rates

Given that millions of Canadians are either self-employed or paid on a 100% commission basis, there are several self employed mortgage financing programs available in Canada that cater to the unique needs this borrowing population. Mortgage lenders offer various ways of determining and accepting self-employed income, and each approach will have a direct impact on the rate and terms available. Review the information below for some ideas on how lenders will look at income for the self employed, and contact us for a free, no obligation consultation.

Low Market Rates For Self Employed Mortgages

Lenders offer among the lowest market rates for stated income business for self mortgages, and the absolute lowest rates if taxable income is sufficient for approval and credit scores are strong.

Grossed Up or Stated Income Mortgages

If the taxable income needs to be grossed up and ‘stated’ at a higher amount in order to qualify, then some different rules can apply and alternative documents can be considered to show income.

Stated Income Mortgages with as little as 10% Down Payment

If income tax Line 150 taxable income is not sufficient for approval, then as little 10% down is allowed with alternative documents, such as bank account activity and sales invoices for mortgage approvals.

Proving Taxable Income

Central to determining how business for self income will be seen or ‘treated’ by a lender is how much taxable income has been claimed over the last 2 years on the Line 150 of tax returns. If the average taxable income is sufficient to support the qualification of the mortgage, then this will be treated more like a standard mortgage transaction. If Line 150 taxable income is sufficient for approval without the need to ‘inflate’ or ‘gross up’ the income for mortgage purposes, then 5% down payment is allowed.

Less Than 35% Down Payment - Income 'Gross Ups'

The relatively new Federal Government B-20 lending rules allow for taxable self employment income to be ‘grossed up’ by a reasonable amount and stated if between 10% and 34.9% is provided for down payment. The type of industry, bank account statements, company web site, location and a host of other variables can be looked at to help determine the reliability of the income on applications under 35% down payment.

Over 35% Down Payment - Lenders Are Most Flexible

Because the B-20 lending rules do not apply as strictly to mortgage loans with more than 35% equity available, lenders can be more flexible in their acceptance of a particular stated income, with little evidence of income required (lender dependent). Many lenders will still need to see some form of income, however others will not.

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