Close to 20% of all income earners in Canada are self-employed (or at least part-time) in this growing demographic. If you fall into this category, it may be difficult to obtain a mortgage, since income is not always easy to prove (business owners expense as much as possible in order to minimize taxes payable).
Generally, you must have been a self-employed worker or small business owner for at least two years, and show two years’ worth of sound financial and credit management. Therefore, in order to obtain a self-employed mortgage, most lenders require that personal tax Notices of Assessment from the past 2-3 years be included with the mortgage application. Those who are able to provide this proof of income can generally access the same mortgage products and rates as traditional borrowers.
If you are unable to provide standard proof of income, you must at least have a good credit history and provide a minimum downpayment of 10%, so you can finance or refinance your dream home. It is possible for self-employed workers to refinance your mortgage for up to 80% of the value of your property, take out a mortgage loan with a fixed or variable rate Withdraw up to $35,000 from an RRSP to make a downpayment under the Home Buyers’ Plan (HBP).