Self Employed Mortgages

Over the past 6 years working as a self-employed, entrepreneurial mortgage broker, I’ve been surprised again and again by calls from potential clients or conversations with entrepreneurs stating, without much doubt, that it is next to impossible for the self-employed to get approved for a mortgage.

I’m not sure where this incorrect information comes from but I’m relatively sure that most of the problem boils down to poor training of employees at your local bank or laziness of lenders unwilling to look at the variety of options available to finance the self-employed.

The reality is: Mortgages for the self-employed are easy to approve.

What Do You Need To Get Your Mortgage Approved?

• 2 years notices of assessment and T1 Generals showing the income from your business venture

• 2 years Business Financial Statements if you are incorporated

• Canada Revenue Agency Statement of Account showing taxes are paid up to date

• Down payment from your own resources, a gift from close family or the sale of chattels with receipts

• A decent credit score (preferably over 650 but some A lenders will work with clients over 600)

Alternative Mortgage Programs

Some alternative programs, like stated income programs, will process your application by observing your bank statements or estimating your cash earnings (if you happen to receive a lot of cash that doesn’t get reported to the tax man).

Others will look at the business bank account and take a 3, 6, 9 or 12 month average of the business earnings in lieu of tax filings.

At any rate, self-employed mortgage options are out there and available.

I once had a client come into my office, sitting down in frustration.  He stated upfront that he was sorry he was wasting my time because he had already been turned down 3 years straight by his home bank.  He had arranged to meet with me on the advice of a friend.

Throughout the mortgage application process, he continued to express how hard it was for self-employed people to receive financing and that it was really unfair.  He thought out loud about just getting a salary or wage paying job in order to qualify for the home he wanted.

Meanwhile, I was running his numbers and couldn’t figure out why his bank wouldn’t give the guy a mortgage loan.  I kept waiting for the proverbial “shoe to drop” while asking him my full list of application questions.

In the end, I couldn’t find the problem because there was no problem.  The client had strong 2-year income, a solid, provable down payment and a decent credit score.

The lender just didn’t know how to get this client qualified.

I don’t mean to run down your local bank lenders.  Many of them are super qualified while some don’t have the necessary training.  Others are opening accounts, approving credit cards, lines of credit and car loans as well as having investment conversations with clients.  They’re just spread too thin.

Mortgage brokers, like me, work day in and day out in the mortgage sphere.  We specialize in mortgage lending because we have to make files work for our clients.

For the self-employed, mortgage brokers are a fantastic resource and can be called upon to get your financing approved.

Be well. Stay healthy.    Thank you very much for reading.  Please share 🙂

One of my hobbies is blogging about mortgages, debt and government policy.  During the day I’m a MORTGAGE BROKER in Kelowna, BC!

Michael Huber
Huber Mortgage

PS – I’m always available if you have any mortgage related questions.  Contact me HERE.

If you’d like some handy tips on how to save money when you buy your next house, Check out the free Huber Mortgage Home Buyers Guide HERE