How Much Salary and Dividends to Claim for an A-Lender Mortgage (Using the BFS Qualification Line)

Tax time is here. If you own a business, you get to choose what income you claim.

Quick disclaimer: this is for mortgage qualification planning only. It is not tax advice. I am not your accountant or financial advisor. Lender and insurer rules vary, and they change. The point of this post is to help you and your tax pro make a better decision with real mortgage math in mind.

If you just want the answer, skip to the section called “My BFS Qualification Line Calculator.”

Stop using line 15000 to decide what income to claim

A lot of people Google “line 15000 mortgage” because they want a shortcut. I get it.

But line 15000 is not how lenders underwrite business-for-self income.

It can be a starting signal. It is not the decision tool.

Here’s why it’s misleading for planning: line 15000 hides the mix. Salary, dividends, and retained earnings can all roll up into what looks like “total income,” but lenders do not treat those pieces the same way.

If you have a mortgage coming up and you are deciding what to claim, you need a method, not a single number.

Important disclaimers before we get into strategy

This matters because people make big decisions off small misunderstandings.

• Not tax advice. This is mortgage qualification planning only.

• Lender rules vary by lender, product, insurer, and even file details.

• Exceptions exist, but only when risk is mitigated and documented properly.

• Your accountant and your mortgage pro should coordinate. One optimizes taxes. The other optimizes borrowing cost and approval certainty. You want both in the same conversation.

The real problem: your “total income” doesn’t tell you what to claim

Issue 1: Claim too little and you may get pushed into higher cost options

If you claim too little income, you may still get approved, but only with higher-cost capital. That can mean a higher rate, lender fees, or both. Sometimes the extra borrowing cost is bigger than the tax you saved.

Issue 2: “Just hit a total income number” is too vague to plan properly

Business owners get told hand-wavy stuff like: “You need to claim X income to qualify.”

That is not specific enough to make a good decision because there are many ways to reach the same “total,” and those ways can qualify very differently.

Issue 3: Different lenders treat salary, dividends, and retained earnings differently

Even if two lenders look at the same business, they can calculate usable income differently. They can apply different add-backs, different haircuts, and different rules for dividends.

That’s why this is not a flat surface. It’s bumpy. You can make the “right” tax move and still create a mortgage problem, or you can make a slightly different claiming move and unlock a better mortgage option.

The three common “solutions” that usually backfire

Assume you won’t qualify and don’t apply

This is the one that bugs me the most, because it’s often wrong. Many business owners can qualify, they just need the file structured properly and the income treated correctly.

Claim the highest number without optimizing

This can work. It is also the most expensive way to be “safe.” You may be paying more tax than you needed to, just to avoid uncertainty.

Default to minimum income for taxes and accidentally raise borrowing costs

This is common. It is not usually “the accountant’s fault.” Their job is to reduce taxes. But if nobody runs the mortgage math at the same time, the result can be higher borrowing costs or fewer options.

Myth vs reality: line 15000 is a starting point, not the underwriting answer

Myth: line 15000 tells me what I qualify for

People want a simple rule: “My line 15000 is X, so I qualify for Y.”

Reality: lenders rebuild “usable income” from the mix and the policies

Lenders do not just read line 15000 and stamp the file. They look at how the income was created, how stable it is, and how it fits their policy.

Myth: I only need a single target income number

A single target sounds efficient. It is usually fake precision.

Reality: different mixes can qualify differently, even at the same “total”

Two borrowers can both show the same total income, but one qualifies easily and the other gets boxed into higher cost lending. The difference is the mix and the rules applied to that mix.

The BFS Qualification Line: the simplest way to plan salary, dividends, and retained earnings

This is the core of the whole post.

What the BFS Qualification Line is (in one paragraph)

The BFS Qualification Line (Business for Self Qualification Line) is a curve that shows the minimum mix of salary and dividends you need to claim to qualify for a target mortgage, under a specific lender policy. Salary is on the x-axis. Dividends are on the y-axis. Retained earnings becomes the dependent variable, because money not taken as salary or dividends stays in the corporation.

Why it works: it maps combinations of salary and dividends that meet qualification rules

Instead of guessing one income number, you map many combinations that can work. Then you pick the lowest-necessary claiming strategy that still qualifies for the mortgage option you want.

Where retained earnings fit: the dependent variable that changes based on what you take out

Retained earnings matter because they are fuel for the business. Pulling money out can reduce growth, flexibility, and sometimes future income.

The BFS approach forces you to see the tradeoff clearly: every extra dollar you take personally is one less dollar left inside the company.

The goal: find the minimum claiming mix that still qualifies for an A-lender mortgage

Not the lowest tax bill at all costs. Not the highest income at all costs.

The goal is the best overall outcome: approval certainty, good terms, and a claiming plan that fits your bigger strategy.

How lenders actually treat salary, dividends, and retained earnings

This is the part most people never get explained.

Salary: why predictability helps, what lenders verify

Salary is usually easier for lenders to verify. It is predictable, and it has a paper trail. Lenders often like it because it looks stable.

But salary also comes with tax and CPP considerations, so it is not automatically “better.” It is just treated differently.

Dividends: what lenders look for (pattern + sustainability), common constraints

Dividends can work. A lot of business owners qualify with dividend income.

The catch is that lenders usually want to see a pattern and a reason it is sustainable. If dividends jump around wildly, some lenders get conservative. Some lenders will average. Some will need more context.

Retained earnings: why it matters for the business, and when lenders care indirectly

Lenders do not usually lend based on retained earnings directly for a standard home mortgage.

But retained earnings matter indirectly because they influence business stability, future income, and your ability to keep paying yourself.

Also, some lender programs look at corporate financial strength in different ways. That’s part of why rules vary so much.

Add-backs and haircuts: why “usable income” can differ from what you think

This is the quiet killer.

Even with the same business, two lenders can adjust the numbers differently. Some expenses get added back. Some income gets discounted. Some lenders take a conservative view if the story is not documented clearly.

That’s why you can’t plan off one line on your T1.

How the BFS Qualification Line is calculated (without turning it into a math class)

You do not need to be a math person to understand this. You just need the logic.

Start with the mortgage target and reverse the debt servicing ratios to get required income

A mortgage approval is a ratio problem. Ratios are based on income, debts, and housing costs.

So you start with the mortgage target, estimate housing costs, include debts, then reverse-engineer the income required to fit within lender ratios.

Apply policy treatment to income types (what counts, what’s adjusted)

Then you apply the lender’s treatment rules. Salary may be used one way. Dividends may be averaged or treated differently. Certain items may get adjusted.

This step is the reason “total income” is not enough.

Solve for the minimum dividend needed given salary X, under that policy

Now you pick a salary level and solve: what is the lowest dividend amount that, after policy treatment, still meets the required usable income?

That gives you a point.

Repeat that for many salary levels and you get the curve.

Plot the curve: on or above qualifies, below does not

If your salary and dividend mix is on or above the line, you qualify for that mortgage under that policy.

If you are below the line, you don’t.

Simple rule. Real math underneath.

The point is not “pay the least tax” or “claim the most income”

This is where business owners get trapped in false choices.

The point is total cost and total outcome: tax cost + rate + fees + certainty

A good decision considers the full stack: tax cost, mortgage rate, lender fees, and how confident the approval is.

Why a slightly higher claimed income can reduce total cost

If claiming a bit more income keeps you in an A-lender option instead of pushing you into a higher-cost option, you can end up with a better total outcome even after paying more tax.

Why this should be a coordinated decision with your accountant

Your accountant is optimizing one side of the equation. Your mortgage pro is optimizing another side.

If they do not talk, you can “win” taxes and lose the mortgage, or you can “win” the mortgage and overpay tax.

Coordination is how you avoid both.

My BFS Qualification Line Calculator (and how to use it)

This is the tool I built because “it depends” is not an answer.

Quick disclaimer again: lender rules vary and can change. This is planning support, not a promise of approval.

What it answers: “What salary and dividend mix do I need to claim to qualify?”

It gives you the BFS Qualification Line for your target mortgage and shows you which income mixes qualify under different lender styles.

Inputs it needs

To use it properly, have these ready:

• Latest filed financial statements or T2s

• 6 months of business bank statements, or accurate year-to-date numbers

• Current year estimates

  • gross revenue

  • operating expenses

  • salary paid so far

  • current business bank balance

Outputs: the qualification line and the tradeoffs

You get:

• the line itself, meaning the minimum mixes that qualify

• the tradeoffs, meaning what claiming choices do to retained earnings and options

The 3 variations it runs

• Variation 1: Standard A-lender program

• Variation 2: A-lender program that allows net income usage

• Variation 3: B-lender stated income comparison

If you want, I can write the exact “calculator section” copy for your website with a clean link placement and a short disclaimer block that keeps you safe.

FAQs: line 15000, salary vs dividends, retained earnings, and the BFS Qualification Line

These are written for quick answers, so they can rank in featured snippets.

What do lenders use instead of line 15000 for self-employed mortgage qualification?

They use underwriting rules to rebuild usable income from your documents. That can include T1s and NOAs, corporate financials, dividend history, and sometimes bank statements, depending on the lender and program.

Why is line 15000 not enough to decide what income I should claim?

Because line 15000 blends different income types that lenders treat differently. Two people can have the same line 15000 and qualify for different amounts due to how that income was earned and documented.

What is the BFS Qualification Line in simple terms?

It is a map that shows the minimum salary and dividend mix you need to claim to qualify for a target mortgage under a specific lender policy.

How does the BFS Qualification Line help me choose salary vs dividends?

It shows you the lowest dividend needed for a given salary level to qualify. That lets you compare options instead of guessing.

Do lenders treat salary and dividends differently for mortgage approval?

Yes. Salary is usually treated as more predictable. Dividends can still work, but lenders often look for stability and sustainability, and rules vary by lender.

Do dividends count as income for A-lender mortgages in Canada?

Often, yes. Many A-lenders use dividends, especially if they are consistent. The exact treatment depends on the lender, your history, and how the business financials look.

How do lenders evaluate dividend stability for incorporated business owners?

They usually look for a pattern over time, whether the business can support the dividends, and whether the income looks repeatable.

How do retained earnings affect mortgage qualification for business owners?

Retained earnings often matter indirectly. They support business stability and future income. If you drain retained earnings to qualify, you may weaken the business and create future risk, even if the mortgage approves.

What are add-backs and haircuts, and why do they change usable income?

Add-backs are expenses lenders may add back to income if they believe they are non-recurring or acceptable adjustments. Haircuts are discounts lenders apply when they view income as less stable. Both change what income is usable for qualification.

Why can two lenders approve different amounts using the same tax return?

Because they can treat income types differently, apply different policy rules, and make different exceptions when risks are mitigated.

Can I qualify for an A-lender mortgage with low taxable income if my business is strong?

Sometimes, yes. It depends on the program, the documents, and whether the lender can support your stated income story with evidence. This is exactly why you need a method.

If I claim less income, when do I get pushed into B-lender or stated income programs?

When your usable income, after lender policy treatment, is not enough to meet debt servicing ratios for the mortgage you want. The threshold varies by lender and file.

What documents do I need to accurately plan my salary and dividend mix?

Usually: T1 and NOAs, T2 or corporate financial statements, proof of dividend history, and business bank statements or year-to-date numbers. The more accurate the inputs, the more accurate the plan.

How far ahead of a mortgage application should I plan my tax filing strategy?

Ideally months ahead of an offer, not weeks. Planning early gives you time to clean up documents, stabilize income patterns, and avoid rushed approvals.

Should my accountant and mortgage professional coordinate, and what should they review together?

Yes. They should review the mortgage target, income mix options, retained earnings impact, and the total cost tradeoff between tax paid and borrowing costs.

Bottom line

Line 15000 is not the decision tool.

The decision tool is the mix: salary, dividends, and retained earnings filtered through lender policy.

If you want to stop guessing, use the BFS Qualification Line to pick a defensible, lowest-necessary claiming strategy that still qualifies for the mortgage option you actually want.

P.S. If you'd like to see an estimate of the income you need to qualify for your mortgage, you can try out my BFS Qualification Line calculator here: [BFS Qualification Line Calculator]