Being self-employed does not mean you have to be limited or restricted from the appreciating and tax-efficient growth of Canada’s real estate market.
Banks have a constrained and narrow-minded field that they lend in, requiring two full years of income statements. So, what do you do, this in case you’ve recently come to be self-employed? Well, the good news is that as mortgage brokers, we don’t.
We can work with as low as six months of you being self-employed, through using your gross deposit over the past six months and doubling it to annualize.
Further to this, banks use your net income. So, if your accountant is creative, therefore reducing your income to mitigate taxes, you likely won’t qualify for a mortgage.
We’ve created a guide that will help you overcome the challenges of being self-employed and assist you to move ahead with your goal of purchasing a home.
How can I qualify for more without increasing my net income?
If you maintain most of your income inside your company, we can qualify you for a mortgage using the gross deposit of business income over the past 12 months or allowing for retained earnings within your corporation to be included.
What is considered as qualifying income?
Qualifying income at most banks would be using your line 150 net income averaged over the last years. As your broker, we can further “gross-up” your net income by 15% or use add-backs out of your T1 General.
If the above income is insufficient or much less than years in business, we can qualify you with lenders with as low as six months of business for self.
Qualifying income may be dividend income, T4’d salary income, and commission earnings.
What income files will we need? Lenders will require:
-Your last two years of full T1 General’s and the related notices of assessment
-If incorporated: your complete articles of incorporation
-If sole proprietor: your business or HST registration
-Last six months of bank account statements
If my business produces seasonal income, will I still qualify?
Yes, the same averages and same income requirements apply as if you earned a full-year income.
Why do we require so much documentation?
We recommend connecting us thru e-mail together along with your accountant so we can obtain the applicable documentation on your behalf.
Our document collection system has made sharing and uploading these files very convenient.