Getting a self employed mortgage can be tough.
It may seem like everyone you talk to says you can’t get financed. Your friends, family, and even the bank tells you it’s difficult.
But in many cases, it’s not quite true. There often is a solution!
Fun fact: did you know your bank can’t tell you to go across the street if there’s a better option?
How Do Lenders Define a Self-Employed Borrower
Definitions and Categories
If you own at least 25% of a business, you’re usually considered self-employed by mortgage lenders. This can include:
- Sole proprietors
- Business owners with corporations
- Freelancers or independent contractors
- Working for your family’s business
How Mortgage Lenders View Income Differently for Self-Employed vs Salaried Borrowers
Unlike salaried workers who provide T4s, self-employed income often fluctuates. Lenders look for consistency and proof your income is stable and recurring.
Mortgage Options for Self-Employed Canadians
Traditional Mortgages (When You Have Verifiable Income)
If you’ve filed taxes for two years and show stable income, you can often qualify with A-lenders (like banks or credit unions) at their best rates.
Special Self Employed Mortgage Programs
Something interesting is that many lenders have business owner programs that aren’t well known. In many cases, if you’ve been declined, it might be a matter of your bank rep not knowing about a program.
Strategic Planning or Restructuring
Many times I’ve had files that just needed a few tweaks to get their mortgage approved. Sometimes it has to do with the mortgage selection, sometimes debts need to be paid out or adjusted.
Stated Income Mortgages (When You Have a New Business or Claim Low Taxable Income)
If you don’t have full tax documentation, some lenders allow “stated income” mortgages. You declare your income and support it with:
- Bank statements
- Invoices and contracts
- Accountant letters
Alternative Lenders (Flexible but Higher Cost)
If banks say no, B-lenders or mortgage finance companies often say yes. They allow more flexibility on documents, income fluctuations, and credit history—but usually come with slightly higher rates and lender fees.
Tips to Improve Your Mortgage Approval Odds
Organize Your Financials Like a Pro
- File your taxes on time
- Minimize aggressive write-offs
- Keep business and personal finances separate
Clean Up Credit and Lower Your Debt
- Pay off high-interest cards
- Avoid new debt before applying
- Check your credit report for errors
Work With a Broker Who Specializes in Self-Employed Mortgages
Some brokers understand self-employed mortgages inside and out. They know how to package your file, match you with the right lender, and explain your income story clearly.
Common Myths About Self-Employed Mortgages
“You Need a Huge Down Payment”—Not (Quite) True
You can still qualify with 5% down on an owner-occupied property.
Higher down payments can help – specifically if we need to use special programs.
“You Can’t Get a Good Rate”—Also False
With a strong file, many self-employed borrowers qualify for the same low rates as salaried applicants.
Frequently Asked Questions (FAQs)
Can I Get a Mortgage with Less Than 2 Years of Self-Employment?
Yes—especially if you were in the same industry before or can show consistent income through contracts or statements.
What If My Income Changes Year to Year?
Lenders usually average your last two years’ income. If one year was lower, be ready to explain why (e.g. startup costs, reinvestment).
Are There Options If I Can’t Prove My Income Traditionally?
Yes. Stated income or bank statement programs may still work—especially through alternative lenders.