Being self-employed shouldn't automatically stand between you and your homeownership goals.

Business owners, contractors, entrepreneurs and other self-employed Canadians can have income that looks very different from a traditional salary.

At SGD Mortgages, we help self-employed borrowers explore mortgage solutions based on the bigger financial picture — not simply what's written on one line of a tax return.

Why Can Getting a Mortgage Be Different When You're Self-Employed?

Traditional employees can often demonstrate their income with an employment letter and pay stubs.

For someone who's self-employed, income may come from a sole proprietorship, partnership or corporation and can fluctuate from year to year.

Business owners may also deduct legitimate business expenses, which can reduce the income appearing on their tax return.

That doesn't necessarily mean you can't qualify.

The key is finding the right mortgage program and providing documentation that gives the lender a clear picture of your income, business and overall financial position.

Who Is Considered Self-Employed?

Self-employed mortgage solutions may apply to:

• Business owners

• Sole proprietors

• Partners in a business

• Incorporated business owners

• Independent contractors

• Freelancers

• Commission-based professionals

• Entrepreneurs

The documentation and mortgage options available will depend on how your business is structured and how you earn your income.

How Is Self-Employed Income Verified?

There isn't one document that works for every self-employed borrower.

Depending on the lender, mortgage program and your individual situation, you may be asked to provide documents such as:

Personal Tax Documents

Notices of Assessment (NOAs), T1 Generals and other tax documentation may be used to verify your reported income.

Business Financial Statements

Financial statements can help demonstrate the performance and financial stability of your business.

Business Bank Statements

Recent business account statements may help support your business activity and cash flow.

Business Registration

Articles of incorporation, business licences or other registration documents may be requested to verify the business.

GST/HST Returns

Applicable GST/HST documentation may also be used to support business activity and income.

Contracts

Signed contracts may help demonstrate predictable future earnings in certain situations.

The exact documentation required varies by lender and borrower.

Business Deductions Don't Always Tell the Whole Story

This is an important consideration for self-employed borrowers.

Business owners may legitimately deduct expenses to calculate taxable income.

As a result, the income reported for tax purposes may not always reflect the full financial picture a mortgage lender can consider.

Under CMHC's Self-Employed program, income from a sole proprietorship or partnership may, in eligible circumstances, be grossed up by 15% or adjusted by adding back certain eligible deductions.

This doesn't mean every borrower automatically qualifies for an income increase. The method used depends on the borrower's circumstances, documentation, insurer and lender requirements.

What Will Lenders Look At?

A mortgage decision isn't based on self-employed income alone.

Lenders may consider:

Income

Your reported and supportable income and how consistently it has been earned.

Business History

CMHC recommends approximately 24 months of operating the business or experience in the same line of work, although there may be flexible options for people who have recently become self-employed.

Credit

Your credit history helps lenders understand how you've managed financial obligations.

Existing Debts

Credit cards, lines of credit, vehicle loans, other mortgages and additional obligations can affect how much mortgage you can afford.

Down Payment

You'll need to demonstrate both the amount and source of your down payment.

Property

The property itself must also satisfy the requirements of the lender and mortgage program.

Recently Became Self-Employed?

You don't necessarily have to wait years before exploring your mortgage options.

CMHC recognizes that some borrowers may have been self-employed for less than 24 months.

Additional factors that may support an application can include:

• Previous experience in the same industry

• Relevant education or professional training

• Purchasing an established business

• Predictable earnings

• Available cash reserves

• A demonstrated history of managing credit responsibly

Every situation is different, so it's worth reviewing your circumstances before assuming you won't qualify.

How Much Down Payment Do Self-Employed Buyers Need?

Being self-employed doesn't automatically mean you need a 20% down payment.

Under CMHC's current Self-Employed program, eligible owner-occupied purchases may qualify for financing of up to 95% loan-to-value for one- or two-unit properties, meaning minimum down payment requirements can start at:

5% on the first $500,000 of the purchase price

plus

10% on the portion above $500,000

Other requirements and mortgage insurance premiums apply.

Your actual down payment requirement will depend on your purchase price, property, mortgage program and qualification.

What About the Mortgage Stress Test?

Self-employed borrowers are still subject to applicable mortgage qualification requirements.

For CMHC-insured mortgages, debt-service ratios are currently calculated using the greater of:

Your mortgage contract rate + 2%

or

5.25%

The purpose is to make sure borrowers can manage their mortgage payments if interest rates increase.

Buying, Refinancing or Renewing?

Self-employed mortgage solutions aren't limited to first-time home purchases.

Depending on your circumstances, we can explore options for:

Purchasing a Home

Find financing that takes your self-employed income structure into consideration.

Refinancing

Explore whether available home equity can help you consolidate debt, fund renovations or meet other financial goals.

Mortgage Renewal

Compare available mortgage options before automatically accepting your existing lender's renewal offer.

Investment Properties

Business owners and self-employed borrowers may also have financing options for qualifying rental or investment properties.

What If Your Bank Said No?

A decline from one bank doesn't necessarily mean there are no mortgage options available.

Different lenders may have different approaches to:

• Self-employed income

• Business deductions

• Length of self-employment

• Credit profiles

• Debt-service calculations

• Documentation

• Property types

Depending on your situation, mortgage options may be available through traditional, alternative or other appropriate lenders.

The important part is understanding why you were declined and whether another lending solution fits your financial circumstances.

Why Work With SGD Mortgages?

Access to 65+ Lenders

Instead of relying on the qualification rules of a single bank, we can compare mortgage solutions across our lender network.

Experience With Self-Employed Income

We'll help you understand which documents may be needed and how your income can be presented accurately to potential lenders.

More Than One Lending Path

Depending on your qualifications, we can explore traditional and alternative mortgage solutions to find options that fit your situation.

Personalized Mortgage Strategy

Your business structure, income, credit, down payment and financial goals are unique. Your mortgage strategy should reflect that.

Guidance From Application to Closing

We'll help you prepare your documentation, understand lender requirements and navigate the mortgage process from application through closing.

Self-Employed? Let's Look at the Full Picture.

Your income may not fit neatly into a traditional pay stub — but that doesn't mean you should assume you can't qualify for a mortgage.

Let SGD Mortgages review your income, business and financial situation and explore the mortgage options available to you.