Mortgages for Business Owners

Yes!

Even if you are a relatively new business owner or contractor, there is a mortgage for you.

Depending on your type of business, length of time operating, and your business financials, there are different options.

The list of documents you’ll need varies between lenders and their specific programs.

In general, expect to collect the following:

✅ 2 Years of NOAs (Notice of Assessments)

✅ 2 Years of T1 Generals (Including all Related Schedules)

✅ If you’re incorporated, you’ll need either 2 years of business financials statements or T2

✅ Incorporation Documents including Articles of Incorporation

During an initial call, I can fine tune the exact document mix required. This will reduce how many documents are needed. If it’s easier, I’d be happy to chat directly with your accountant to request this and give you a seamless service.

If you’re a business owner there are a few primary ways lenders review income:

1. Take home, taxable income. This is typically your claimed salary and dividend income from the business.
2. Corporate Net Income (After Taxes and Dividends). Some lenders will allow us to peak inside of your business and use some of that income to help increase borrowing power.
3. Add Backs and Gross Ups – Some lenders know that you’ll likely claim some expenses to reduce your taxable income. Because of this, they may allow us to add back some expenses or just increase your taxable income for qualifying.
4. Bank Statement Programs – These programs allow us to look directly at your bank statements and your REAL profitability.

Depending on the situation, one or two of these methods may be combined.

Once all documents are collected we filter for which lenders will be able to get you funded, then select the option with the best rates and terms.

In most cases, approximate borrower power is 4.5x your eligible income.

For example, let’s say you take home $50,000 per year in salary and $50,000 per year in dividends.

You will approximately qualify for $450,000 in mortgage funding.

** IMPORTANT: This is in no way a real pre-approval or pre-qualification. I HIGHLY recommend having your file reviewed before putting out any purchase offers!! **

In most cases, yes you can!

Some lenders may require that you use a Shareholder loan or claim the down payment as income if you’re buying in your personal name.

Some lenders may be open to holding the property in an operating corporation but there are not many options for that.

Yes there is.

This can be broken down further and we can discuss the difference between:

• Residential and Commercial Mortgages
• Personal Name vs Hold Corp Name vs Op Corp Name

Residential and Commercial

Generally, if you’re buying any real estate that is 4 units or less, you’re using residential financing. Even if you buy in a corporation.

These mortgages are usually the cheapest option and give you the highest loan size.

Commercial mortgages are very different. They typically are for commercial properties, properties that have 5 or more units, or if you have specific business needs.

Personal Name vs Hold Co Name vs Op Co Name

When deciding on “who” will be on title, it’s important to not only understand the tax and legal differences, but also financing.

Not every lender allows purchases in hold co with residential financing. Even fewer allow purchases in op cos.

These options do exist but you need to be aware of the pros, cons, costs, and benefits.