Self-Employed Mortgages in Ontario
Self-Employed? Your Income May Need a Different Approach.
Running your own business shouldn’t automatically stand in the way of getting a mortgage.
But when you’re self-employed, qualifying can look different. Business expenses, deductions, fluctuating income and the way you pay yourself can make your finances more complicated than a traditional salaried application.
Garland Mortgage Solutions helps self-employed borrowers and business owners in Mississauga and across Ontario understand how lenders may assess their income and explore mortgage options based on their individual circumstances.
Whether you’re a sole proprietor, partner or incorporated business owner, we’ll help you understand what may be possible.
Why Work With a Mortgage Broker When You're Self-Employed?
Different lenders can look at the same self-employed borrower differently.
One lender may rely heavily on taxable income.
Another may have a mortgage program that provides additional flexibility around self-employed income documentation.
Another may be better suited to an incorporated business owner or a borrower with a shorter business history.
Going directly to one financial institution means you’re generally working within that institution’s lending policies and mortgage products.
A mortgage broker can explore options from multiple lenders.
Garland Mortgage Solutions can review your income structure, business history and documentation and determine which lending options may be appropriate to explore.
If your reported income supports the mortgage you’re requesting, you may qualify using traditional income verification.
This can provide access to mortgage options available through banks, credit unions and other traditional mortgage lenders.
Some mortgage programs are specifically designed to provide greater flexibility when assessing self-employed borrowers.
These programs may consider additional documentation or different approaches to income verification.
If your income doesn’t fit traditional lending guidelines, an alternative lender may be another option.
Alternative lenders can sometimes take a different approach to self-employed income and other aspects of an application.
Rates, fees, down payment requirements and qualification criteria may differ from traditional mortgage products, so it’s important to understand the complete cost and terms before proceeding.
In certain circumstances, private financing may also be considered.
Private mortgages generally have higher borrowing costs and fees than traditional mortgage financing and are typically used as a short-term solution rather than a first choice.
If private financing is being considered, it’s especially important to understand the exit strategy and how you plan to move into longer-term financing.
Self-Employed Mortgage Options
There isn’t one specific mortgage that every self-employed borrower needs.
Depending on your financial situation, documentation and property, different lending options may be available.
Why Self-Employed Borrowers Work With Garland Mortgage Solutions
Garland Mortgage Solutions is based in Mississauga and helps self-employed borrowers and business owners across Ontario navigate mortgage financing.
We Understand That Taxable Income Isn't Always the Whole Story
Self-employed income can be more complicated than a salary shown on a pay stub. We take the time to understand how your business operates and how you earn your income before exploring potential mortgage options.
Multiple Lender Options
Different lenders have different approaches to self-employed borrowers. We work with a wide range of lenders, allowing us to explore different mortgage products and qualification methods based on your circumstances.
We Help You Prepare Your Documents
Self-employed mortgage applications can require more documentation. We'll help you understand what may be required so you can prepare your application before it reaches the lender.
Clear Explanations
We'll explain why a lender is requesting certain information, how your income may be assessed and what your mortgage options could mean for you.
Frequently Asked Questions By Self-Employed Clients
Yes.
Being self-employed does not automatically prevent you from qualifying for a mortgage in Canada.
The difference is often in how your income is documented and assessed.
A salaried employee may be able to demonstrate income using documents such as an employment letter and pay stubs.
If you’re self-employed, a lender may need to look at additional documentation to understand your income, business history and overall financial position.
Depending on your situation and the lender, this could include tax returns, Notices of Assessment, business financial statements, bank statements, business registration documents or other supporting information.
The right approach depends on how your business is structured, how long you’ve been self-employed and how you earn and report your income.
Self-employed borrowers often have income that doesn’t fit neatly into a traditional employment model.
For example, you might:
- Deduct legitimate business expenses to reduce taxable income
- Leave money inside your corporation
- Pay yourself through salary, dividends or a combination of both
- Have income that changes from year to year
- Have recently started or purchased a business
- Work as an independent contractor
- Have multiple sources of income
Your tax return may therefore tell only part of the story.
Different lenders and mortgage programs can have different approaches to evaluating self-employed income.
That’s one reason working with a mortgage broker can be helpful. Garland Mortgage Solutions can review how your income is structured and explore mortgage options from different lenders rather than relying on one lender’s approach.
There isn’t one documentation list that applies to every self-employed borrower.
The documents required depend on your business structure, mortgage application, lender and the way your income is being qualified.
You may be asked for documents such as:
Personal Tax Documents
These may include your T1 General income tax returns and Notices of Assessment from the Canada Revenue Agency.
Business Financial Statements
Financial statements can help a lender understand your business’s revenue, expenses and financial position.
Business Bank Statements
Recent business account statements may be used in some situations to help demonstrate business activity and cash flow.
Business Registration Documents
Depending on your structure, this might include a business licence, articles of incorporation or other documents showing how long the business has been operating.
GST/HST Returns
GST/HST filings may be requested in some situations to help support business revenue.
Contracts or Other Proof of Income
Signed contracts, invoices or other documentation may be relevant depending on the type of work you do and the mortgage program being considered.
You won’t necessarily need every document listed above.
Garland Mortgage Solutions can help identify the documentation likely to be required based on your situation before your application is submitted.
Not always.
Having at least two years of self-employment or business history can make it easier for a lender to establish a pattern of income.
However, being self-employed for less than two years does not automatically mean you can’t qualify.
Depending on the mortgage program and lender, additional factors may be considered for recently self-employed borrowers, such as:
- Previous experience in the same industry
- Previous employment history
- Education or professional training
- Predictable earnings
- Signed contracts
- Cash reserves
- Credit history
- Whether you purchased an established business
The lender will look at the overall strength of the application.
If you’ve recently become self-employed, it’s worth having your situation reviewed rather than assuming you need to wait two full years before applying.
This is one of the most common concerns we hear from self-employed borrowers.
Business owners often deduct legitimate expenses when filing their taxes. As a result, the taxable income shown on a tax return may be lower than the total revenue generated by the business.
That can affect mortgage qualification if a lender relies primarily on reported taxable income.
However, different lenders and mortgage programs may have different methods for assessing self-employed income.
Depending on the circumstances, certain eligible deductions may be considered when determining qualifying income, or other documentation may be reviewed to better understand the business.
This does not mean that a lender will simply use your gross business revenue as your personal qualifying income.
The income a lender is willing to use will depend on your business structure, documentation, financial history, mortgage program and lender guidelines.
Garland Mortgage Solutions can review your documents and help determine which lending approaches may be appropriate for your situation.
Your income is important, but it isn’t the only part of a mortgage application.
A lender may also consider:
> Credit History
Your credit history helps demonstrate how you’ve managed credit and financial obligations.
> Existing Debt
Credit cards, lines of credit, vehicle loans and other obligations can affect how much mortgage you qualify for.
> Down Payment
The amount and source of your down payment can affect the mortgage products available to you.
> Business History
How long your business has been operating and the stability of its income may be considered.
> Property
The home you’re purchasing or refinancing must also meet the lender’s requirements.
> Overall Financial Position
Depending on the mortgage program, assets, cash reserves and other financial information may also form part of the lender’s assessment.
Mortgage approval ultimately depends on the complete application, not simply whether you’re employed or self-employed.
If you own an incorporated business, your corporation’s income and your personal income aren’t necessarily the same thing.
You might pay yourself:
- A salary
- Dividends
- A combination of salary and dividends
You may also retain earnings inside the corporation rather than paying all business income to yourself personally.
This can make mortgage qualification more complex because a lender needs to determine what income can reasonably be used for your personal mortgage application.
Depending on the lender and mortgage program, additional corporate documentation may be required.
Garland Mortgage Solutions can review how you pay yourself and the documentation available before determining which mortgage options may be worth exploring.
Don’t automatically assume you have to wait two years.
While an established history can make income easier to verify, some lenders and mortgage programs provide flexibility for recently self-employed borrowers.
For example, someone who spent several years working as an electrician before starting their own electrical business presents a different situation from someone who has entered an entirely new industry with no previous experience.
Your previous employment, education, industry experience, contracts, business performance, credit and available cash reserves may all help provide context.
The important thing is to have the situation reviewed before assuming you won’t qualify.
Not necessarily.
Eligible self-employed borrowers may qualify under standard insured-mortgage down payment requirements. Other mortgage programs, particularly certain alternative lending options, may require more equity or a larger down payment.
Potentially.
Just like a purchase, refinancing requires qualification. The lender will consider your income, property value, mortgage balance, debts, credit and other financial information.
How your self-employed income is verified will depend on the lender and mortgage program.
Possibly.
A decline from one lender doesn’t necessarily mean every lender will reach the same decision.
Different lenders can have different policies regarding self-employed income, business history and documentation. A mortgage broker can review why the application was declined and determine whether other appropriate options may be available.
Yes. Garland Mortgage Solutions is based in Mississauga and helps self-employed borrowers and business owners across Ontario and different Canadian provinces explore mortgage options.
Self-Employment Doesn't
Have to Mean Doing the Mortgage Alone
Your finances may look different from those of a salaried employee. That doesn’t mean you should have to figure out mortgage qualification by yourself.
Whether you’ve owned your business for years, recently became self-employed, operate as a sole proprietor or own an incorporated company, Garland Mortgage Solutions can review your situation and help you understand your mortgage options.
Let’s find an approach that fits the way you earn your income.
