Case Study: How a Self-Employed Business Owner Secured a Mortgage in BC

Financing a New Home with Self-Employed Income

Emma had been running her business for over 15 years and was living in her home in White Rock, BC. She wanted to sell that home and use the proceeds as a down payment on a new property in the same area.

Even though her business generated strong income, she did not claim enough personal income on her tax returns for her credit union to approve the mortgage she needed.

She was also aiming to buy a property priced higher than her original plan, which increased the required mortgage amount and made it harder to qualify under standard income rules.

At the same time, she needed to manage how much income she declared personally, using dividends and shareholder loan adjustments, so she could qualify for the mortgage without disrupting her tax strategy.

Using a Lender That Understands Self-Employed Income

We moved away from her original credit union and worked with a lender that specializes in self-employed clients and is comfortable using business income to support the mortgage application.

Instead of relying only on her personal tax returns, we used a two-year Net Income After Tax (NIAT) average from her business financial statements to better reflect her true earning power.

Emma adjusted her mix of dividends and shareholder loan repayments so the qualifying income matched the lender’s corporate income program while still aligning with her long-term tax planning.

Structuring the Purchase and Sale

We mapped out how the sale of her current home would fund the down payment on the new property and structured the numbers to fit the lender’s guidelines.

• Current home value: approximately $514,000 with a mortgage balance of $188,335.

• Estimated sale price: $525,000, leaving about $312,790 in net proceeds after real estate fees, legal costs, and a mortgage penalty.

• New home purchase price: $790,000 with a down payment of about $290,000 from the sale proceeds.

• Final mortgage amount: $500,000 on a 5-year variable rate mortgage with a 30-year amortization.

We initially secured a pre-approval based on a conservative purchase price of $620,000, then updated the file using the NIAT approach so she could qualify for the higher $790,000 purchase price.

Final Approval and New Home Purchase

Emma’s offer on the $790,000 home was accepted with firm subject removal and possession dates.

The lender approved a $500,000 mortgage at approximately 63% loan-to-value (LTV), using her business financials rather than just her limited personal T1 income.

The sale of her previous home funded a large down payment, and the transition into her new property was completed smoothly at the agreed terms.

Long-Term Positioning

Emma was able to move into a higher-priced home than her original $620,000 pre-approval would have allowed, without needing to overhaul her business structure.

She ended up with a conservative LTV, manageable payments, and a lender relationship that understands self-employed income, giving her more flexibility for future planning and potential borrowing needs.