{"id":16627,"date":"2019-06-28T11:18:36","date_gmt":"2019-06-28T15:18:36","guid":{"rendered":"https:\/\/www.zoocasa.com\/blog\/?p=16627"},"modified":"2019-06-28T11:18:38","modified_gmt":"2019-06-28T15:18:38","slug":"self-employed-heres-how-to-qualify-for-a-mortgage","status":"publish","type":"post","link":"https:\/\/www.zoocasa.com\/blog\/self-employed-heres-how-to-qualify-for-a-mortgage\/","title":{"rendered":"Self-employed? Here\u2019s How to Qualify for a Mortgage"},"content":{"rendered":"\n


By Ratehub.ca<\/strong><\/p>\n\n\n\n

Self-employment certainly comes with its benefits; you get to be your own boss, you get to make your own hours, and you get to build a company that\u2019s all on your own, enjoying the spoils along the way. It does, however, have its challenges; long hours, a lack of support, and, in the case of buying a home, higher barriers to entry. <\/p>\n\n\n\n

It\u2019s no secret that qualifying for a mortgage as a self-employed Canadian is more difficult than for those in more traditional professional roles but, with some planning, self-employed Canadians won\u2019t have too much trouble getting into the housing market.<\/p>\n\n\n\n

The key, according to James Laird, president of CanWise Financial, is to be organized and avoid cutting corners when it comes to taxes. <\/p>\n\n\n\n

\u201cMake sure your documentation is all in order,\u201d he said. \u201cAnyone self-employed who might be considering minimizing their income through earning in cash and not declaring it, or writing down as much as they possibly can should realize there is a trade-off for their tax strategy and getting a mortgage.\u201d<\/p>\n\n\n\n

Self-employment in Canada<\/h2>\n\n\n\n

First, some background on self-employment in Canada. <\/p>\n\n\n\n

At the end of 2017, 2.8 million Canadians (15% of the workforce) were self-employed, according to Statistics Canada. Those numbers were backed by up CMHC in mid-2018. <\/p>\n\n\n\n

That\u2019s a lot of Canadians who, just like more traditionally employed Canadians, dream of home ownership. However, self-employed Canadians tend to have a more arduous process when qualifying for a mortgage. <\/p>\n\n\n\n

Qualifying for a Self-employed Mortgage<\/h2>\n\n\n\n

The problem with qualifying for a self-employed mortgage<\/a> is that it\u2019s difficult to prove income to lenders. That, coupled with the fact that many business owners tend to expense as much as possible to minimize the taxes they pay, lenders have to be a little more discerning when it comes to issuing mortgages to them.<\/p>\n\n\n\n

Prior to 2014, self-employed Canadians had a fairly easy time qualifying for a mortgage. However, at the end of that year, the Office of the Superintendent of Financial Institutions (OSFI)\u2014the country\u2019s banking regulator\u2014introduced Guideline B-21, which requires federally regulated banks to look more closely at self-employed incomes before approving a mortgage application.<\/p>\n\n\n\n

So, along with providing 2-3 years\u2019 worth of notices of assessment and tax returns, self-employed borrowers must also provide the following; <\/p>\n\n\n\n