I am self-employed. Can I still get a mortgage?
Yes, and the constraint is documentation rather than income. A lenders generally want two years of filed returns and use your net taxable income, which is the number your accountant has spent years minimizing.
The conflict is structural. Good tax planning lowers your declared income, and lenders lend against declared income. A business netting well can support far less mortgage than an employee earning the same gross.
With two years of T1 generals and financial statements, A lenders will typically use an average of your net income, sometimes with a gross-up for reasonable add-backs. Under two years, or where the declared income does not support the purchase, you are looking at B lenders who will underwrite bank statements and business deposits at a higher rate plus a fee.
If you know a purchase is coming, tell your accountant eighteen months out. Declaring more income costs tax and buys mortgage capacity, and that is a trade only you can price.
What it depends on
- how many years of filed returns you have
- declared net income versus gross revenue
- your down payment size
Next questions
What is a B lender and what does it cost me?
A lender that takes borrowers the banks decline, at a higher rate plus a lender fee of roughly one percent of the loan. It is a two or three year bridge back to A pricing, not a destination.
Canada-wide
What credit score do I need to buy a house?
Two different thresholds get confused here. The mortgage insurers set a minimum credit score of 600 for an insured mortgage. A lenders set their own bar, commonly in the high 600s, which is a pricing preference rather than a rule.
Canada-wide