Self-Employed Mortgages in Ontario
If you write off expenses, your tax return understates what you actually earn, and a bank reads that as low income. Self-employed mortgage programs use business bank deposits, contracts or a stated income declaration instead. You can qualify with as little as 10% down, at prime or near-prime rates.
Who this is for
- You are incorporated or a sole proprietor and your net income after write-offs looks far smaller than your real cash flow.
- You have been in business under two years and the bank wants a longer track record.
- Your income is commission, contract, gig or seasonal and varies year to year.
- You are a tradesperson, trucker, realtor, consultant or restaurant owner with strong deposits but messy paperwork.
- You have retained earnings sitting in the corporation that a bank refuses to count.
- You have been declined once already and want to know exactly why before applying again.
How it works
- 1
We work out your real income
Two years of business bank statements, T1 Generals with statement of business activities, T2 corporate returns, or contracts. Many lenders will add back write-offs and a share of retained earnings.
- 2
We pick the right lane
Prime insured stated income, near-prime alternative (B lender), or private, in that order. Most self-employed clients qualify for one of the first two once the file is presented properly.
- 3
We package the file properly
A self-employed application lives or dies on presentation. Business licence or articles of incorporation, an accountant letter, GST/HST returns and a clean cover summary turn a maybe into an approval.
- 4
Pre-approval with a real number
You get a purchase price or refinance amount you can rely on, not a bank rate hold that collapses at the underwriting stage.
- 5
Approval, appraisal and conditions
I clear lender conditions with you rather than dropping a list in your lap. Most files are complete within two weeks.
- 6
Two-year improvement plan
If we had to use an alternative lender, we set the target now: the income documentation, credit and equity position that gets you to a prime lender at renewal.
What it costs
| Cost | Typical range | What it is |
|---|---|---|
| Broker fee (prime and insured deals) | $0 | The lender pays me when the mortgage funds. You pay nothing for my work on an A-lender file. |
| Lender fee (alternative / B lender) | 0.5% to 1.5% | Charged by near-prime lenders on stated income and bank statement programs, usually added to the mortgage. |
| Broker fee (alternative / private) | 0% to 2% | Only applies where the lender does not pay a full commission. Always disclosed in writing before you commit. |
| Appraisal | $400 to $700 | Required on nearly all non-insured and alternative files. |
| Legal fees | $1,200 to $1,800 | Standard purchase or refinance closing costs, plus title insurance. |
| Default insurance premium | 2.8% to 4.5% of the loan | Applies to insured self-employed purchases with less than 20% down. Added to the mortgage, not paid in cash. |
Ask any broker for the cost of borrowing in dollars, not just the rate. On self-employed files the fee structure changes the true cost more than a tenth of a percent on the rate ever will.
Real numbers
Incorporated contractor buying at $780,000
- Line 150 on personal return
- $47,000
- Income accepted after add-backs
- $121,000
- Down payment (15%)
- $117,000
- Bank pre-approval offered
- Declined
- Alternative lender approval
- $663,000 at 5.29%
The same person, the same income, a different lender. Two years later the file moved to a prime lender at renewal.
Restaurant owner refinancing to clear debt
- Home value
- $910,000
- Existing mortgage
- $402,000
- Supplier and card debt
- $96,000
- New mortgage (B lender, 80% LTV)
- $520,000
- Monthly payments before / after
- $4,610 / $3,090
About $1,520 a month back in cash flow, and a documented path back to a prime lender in 24 months.
Illustrative examples only. Your actual rate, payment and costs depend on your credit, income, property and the lender you qualify with.
FAQs
How long do I need to be self-employed to get a mortgage?
Most prime lenders want two years of self-employment history. Alternative lenders will consider one year, and in some cases less if you were previously employed in the same field.
Can I use bank statements instead of tax returns?
Yes. Bank statement programs use six to twelve months of business deposits to establish income. Lenders typically accept 50% to 100% of deposits depending on the business type.
What down payment do I need if I am self-employed?
As little as 5% to 10% on an insured stated income purchase with strong credit, or 20% with an alternative lender. More equity always widens your lender options and lowers your rate.
Do write-offs hurt my mortgage application?
They reduce the income a bank will use. Some write-offs, like capital cost allowance, home office and business use of vehicle, can be added back by many lenders, which is why presentation matters.
Will my rate be higher than a salaried borrower's?
Not necessarily. Insured stated income files often price at standard rates. Alternative lender files typically run 1% to 2% above prime rates, plus a lender fee.
Can I use retained earnings in my corporation?
Several lenders will, provided the company is profitable and you own a majority share. That single detail often turns a decline into an approval.
What if the CRA says I owe money?
Tax arrears must usually be paid out through the mortgage. Many lenders will fund the arrears as part of the new mortgage rather than declining the file.
Do I have to switch accountants or change how I file?
No. I work with the returns you already file. If you plan to buy in two years, though, a short conversation with your accountant now about how much income to declare can save you thousands later.