"As a business owner myself, I understand the unique challenges self-employed Canadians face when applying for mortgages. My team and I are committed to finding you the right solution, regardless of how complex your income situation may be." — Steven Tulman, President and Principal Broker at Clover Mortgage
A self-employed mortgage is specifically designed for individuals who run their own business or work as freelancers. Unlike traditional mortgages, which rely heavily on pay stubs and consistent income, self-employed mortgages offer more flexibility in how income is reported. This type of mortgage allows you to qualify based on your actual income, taking into account the unique financial circumstances of self-employment. This means that even if your declared income on tax returns is lower due to business expenses, you can still qualify for a mortgage that reflects your true earning potential.
Get the home you deserve with our tailored mortgage options for business owners, contractors, and freelancers
Contact Mortgage SpecialistBeing your own boss shouldn’t stand between you and your dream home. At Clover Mortgage, we understand the unique challenges self-employed Canadians face when applying for a mortgage. The financing process can often be a stressful experience, adding to the pressures of securing a mortgage. With over 2.9 million self-employed individuals in Canada, representing 15% of the workforce, we’ve developed specialist expertise in securing mortgages for business owners, contractors, and freelancers. Our dedicated team is here to provide personalized assistance and support throughout the process.
Traditional mortgage lenders often struggle to assess self-employed income, which can fluctuate seasonally or vary based on business expenses. Having a good credit score is crucial for mortgage approval, particularly for self-employed individuals. As expert mortgage brokers for self-employed individuals, we’ve helped thousands of business owners secure competitive mortgage rates through our extensive network of prime lenders, credit unions, and alternative lenders. We ensure proper documentation and accurate records to increase the likelihood of mortgage approval.
Self-employed mortgages come with several distinct advantages:
We offer multiple pathways to homeownership for self-employed Canadians:
These alternative lending solutions can serve as proof of financial stability and eligibility for self-employed borrowers, helping them demonstrate their income and documentation to lenders.
| TERMS | FIXED | VARIABLE | PRIVATE 1ST MORTGAGE | PRIVATE 2ND MORTGAGE |
|---|---|---|---|---|
| 5 Year | 4.09% | 4.45% | ||
| 4 Year | 4.19% | |||
| 3 Year | 4.19% | 4.60% | ||
| 2 Year | 4.59% | 8.99% | 10.99% | |
| 1 Year | 4.99% | 8.49% | 10.99% | |
| 7 Year | 4.34% | |||
| 10 Year | 5.65% |
Income Verification Options
| Documentation Type | Details |
|---|---|
| Tax Returns | Last 2 years' T1 Generals and Notice of Assessment |
| Financial Statements | Income statements and balance sheets |
| Bank Statements | 12-24 months of business account history |
| Business Contracts | Proof of ongoing revenue streams |
| Add-Back Calculations | Business expense adjustments for qualification |
We help maximize your qualifying income by including legitimate business expense add-backs such as:
| Down Payment | Mortgage Insurance Requirement |
|---|---|
| 5-19.99% | Requires CMHC or private mortgage insurance |
| 20%+ | No mortgage default insurance required. However, certain conditions may apply depending on the lender and the type of mortgage. |
| 35%+ | May qualify for special stated income programs |
Understanding credit requirements is crucial for self-employed borrowers seeking mortgage financing. Your credit profile significantly impacts your options and interest rates. Having a good credit score is essential for mortgage approval, especially for self-employed individuals.
| Lender Category | Minimum Score | Typical Interest Rates |
|---|---|---|
| Prime/Banks | 680+ | Best market rates |
| Alternative | 600-679 | +1-2% above prime |
| Private | 500-599 | +3-8% above prime |
Alternative qualification methods for self-employed persons with less than 2 years in business:
Required Documentation:
Determining mortgage affordability can be challenging for self-employed individuals, as traditional lenders may not fully account for business expenses and tax deductions. However, there are several strategies to help you understand how much you can afford. Using a mortgage affordability calculator tailored for self-employed income can provide a clearer picture of your budget. Additionally, working with a mortgage broker experienced in self-employed mortgages can help you find a mortgage program that aligns with your financial situation. These professionals can guide you through various options, ensuring you find a solution that fits your needs.
Partnering with a mortgage broker can be highly beneficial for self-employed individuals seeking a mortgage. Mortgage brokers have access to a wide range of lenders and possess extensive knowledge of the mortgage market. They can connect you with lenders who offer mortgage programs specifically designed for self-employed borrowers. A broker can also help you navigate the approval process, ensuring you receive the best possible interest rate and terms. By providing personalized options and advice based on your unique circumstances, a mortgage broker can make the mortgage process less stressful and more manageable, helping you secure the home you deserve.
Our mortgage specialists understand the unique challenges of self-employed buyers and can help guide you through the process.
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Most conventional lenders and national banks require two years of self-employment history for a traditional mortgage application. However, don't let this discourage you if you're newer to self-employment. Through our network of private mortgage lenders and alternative providers, we offer several pathways to homeownership for newer businesses. Some lenders provide one-year programs if you can make a higher down payment, while others offer stated income mortgages that evaluate your business income differently. For professionals transitioning to self-employment, we have specialized programs that consider your previous employment history alongside your current business income.
The treatment of income for self-employed mortgage applications is nuanced. Conventional lenders typically start with your net income from income tax returns, but the evaluation doesn't stop there. Lenders understand that self-employed workers often minimize their personal income for tax purposes. That's why many lenders will add back legitimate business expenses when calculating your sufficient income for qualification. For stated income mortgages, some lenders examine your gross business income, while others look at your personal income alongside business deposit history. Monthly payments and income declared on your applications are verified against bank statements to confirm your ability to service the mortgage loan.
Yes, you can qualify using previous years' tax returns, which is excellent news for self-employed home loans applicants. Lenders will want to see your most recent income tax returns and Notice of Assessment, ideally for the past two years. They'll also look at your current year's situation through interim financial statements and recent bank activity. This helps demonstrate that your business continues to generate sufficient income for the mortgage payments. The key is showing stable or increasing income over time, which strengthens your mortgage application significantly.
Having taxes owing isn't necessarily a roadblock to getting a mortgage if you are self-employed. Many lenders will work with you if you have an established payment arrangement with CRA. While some conventional lenders require taxes to be fully current, others understand that managing tax payments is part of running a business. We can explore options including private lending solutions during your repayment period, or strategies like making a higher down payment to offset the tax situation. The important thing is to be upfront about any taxes owing and have documentation of your repayment plan.
Your business structure plays a significant role in how lenders evaluate your income for a self-employed mortgage in Canada. For sole proprietors, lenders examine Line 150 of your T1 plus eligible business expense add-backs. Corporate structures allow for consideration of T4 income, dividends, and sometimes retained earnings. Professional corporations might have their gross billings considered by certain lenders. Partnerships are evaluated based on your share of the business income plus any distributions. Each structure has its advantages when it comes to mortgages for self-employed Canada applications.
Absolutely! While the process might be different from traditional employment, self-employed workers have numerous options for obtaining a mortgage loan. The best mortgage lenders for self-employed individuals understand that business income can be complex. Whether through conventional lenders offering standard mortgage rates, specialized stated income programs, or alternative lending solutions, there's likely a mortgage product that fits your situation. You might need mortgage default insurance depending on your down payment size, but there are both traditional mortgage insurance and insured stated income mortgages available. Working with an experienced self-employed mortgage broker is key to navigating these options and finding the best fit for your specific situation.
