Are you a self-employed Canadian hoping to get a mortgage in the near future? If so, understanding what’s required and how these mortgages work could help you improve your chances of getting an approval.
Here are five things to know about getting a mortgage if you’re self-employed.
1. Yes, self-employed Members can qualify for a mortgage
Some people think if you own your own business, you won’t get a mortgage unless you pay a high interest rate to a private lender. Yet many financial institutions, including credit unions like Meridian, offer mortgages to self-employed Members.
If you have an established business with at least two years of acceptable financial statements, the income you earn from that business could help you qualify. Self-employed applicants own full or part-time businesses, including sole proprietorships, incorporations, and partnerships.
2. Gather your personal and business mortgage documents
To qualify for a mortgage when you're self-employed, you'll need to prepare both personal and business documents. Lenders want a full picture of your financial health, not just your income.
Personal documentation
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Credit report and credit score
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Proof of down payment and closing costs (typically 3 months of bank/investment statements)
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Verification of assets like RRSPs, TFSAs, and bank accounts
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Details of current debts (credit cards, loans, lines of credit, mortgages)
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Rental property info, including income and mortgage details (if applicable)
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Purchase agreement, MLS listing, and lawyer contact info
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Social Insurance Number (SIN)
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Proof of up-to-date property taxes (for refinancing)
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Void cheque (if payments will be made from another financial institution)
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2 years of business financial statements (Income Statement & Balance Sheet)
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3 months of business bank statements
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Personal Notice of Assessments and tax returns (most recent 2 YEARS)
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Proof of other income sources
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Confirmation that HST and payroll deductions are up to date
Business documentation (self-employed only):
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2 years of business financial statements (Income Statement & Balance Sheet)
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3 months of business bank statements
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Personal Notice of Assessments and tax returns (most recent 2 YEARS)
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Proof of other income sources
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Confirmation that HST and payroll deductions are up to date
Tip: Lenders will check your tax filings to confirm there are no outstanding debts with the Canadian Revenue Agency (CRA).
3. Self-employed income is calculated through a slightly different method
Mortgage lenders don't use a standard pay cheque when assessing self-employed applicants. Instead, they may:
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Average your past two years of income, or
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Use your most recent income if it's lower than previous years
Because self-employed income can fluctuate, lenders look for stable earnings and reliable documentation.
4. A good credit score could be your key to getting a mortgage approval
As a self-employed borrower, your credit score could help smooth the way to getting a self-employed mortgage.
Lenders consider credit scores when they’re assessing the risk of lending money. Since self-employed income will be less stable than traditional employment income, a good credit score can only help your application.
You can check your credit report for free once a year though Canada's Credit bureaus
5. Why getting pre-approved matters
If you’re curious about qualifying for a mortgage when you’re self-employed, you can learn more by contacting us.
A pre-approval will help you understand how much you qualify for. It will also include a list of the required documentation you’ll need for your own self-employed mortgage.
With a good credit score, two or more years of verifiable income, a satisfactory down payment, an acceptable level of debt payments and the cashflow required, you could soon be on your way to buying that home you want.
