Mortgage Blog


Can I Still Qualify for a Mortgage If My Reported Income Is Really Low? YES!

July 6, 2024 | Posted by: Kiruban Kana

Can I Still Qualify for a Mortgage If My Reported Income Is Really Low? YES!

Mortgages for the Self-Employed: A Comprehensive Guide

Approximately 15% of Canadians are self-employed, making this an important segment in the mortgage and financing space. When it comes to self-employed individuals seeking a mortgage, there are some key differences from the standard mortgage process that you should be aware of.

Key Considerations for Self-Employed Mortgages

1. Lender Flexibility: We work with lenders that do not require CRA tax returns or assessments. This flexibility can be a game-changer for many self-employed individuals.

2. Business History: For self-employed individuals with an established business seeking the best rate financing, the business must have a minimum of two years of history. This includes full or part-time business owners and covers sole proprietorships, incorporations, and partnerships.

3. Required Documentation: To obtain a mortgage, most lenders require the following documents:

- Revenue Canada personal tax Notices of Assessment (NOAs)

- Respective T1 Generals for the previous two years

Typically, individuals who can provide these documents, with acceptable income levels, should have little issue obtaining a mortgage product and rates available to traditional borrowers.

Balancing Tax Write-Offs and Borrowing Power

One primary benefit of being self-employed is the privilege of writing your income down, which reduces your taxable income. However, this also reduces your borrowing power. It's important to balance paying less tax with maintaining sufficient borrowing power for your mortgage needs.

Categories of Self-Employed Borrowers:

As a self-employed individual, you will fall into one of the following two categories:

1. High Enough Income with Tax Documents: You can provide the tax documents and have a high enough income, so there aren’t any initial impediments to your application.

2. Low-Stated Income Due to Write-Offs: You can provide the Revenue Canada documents; however, the net income is lower due to write-offs.

Can I Still Qualify for a Mortgage If My Reported Income Is Really Low?

YES! If your reported income is really low due to write-offs, you can still qualify for a mortgage. Lenders may consider other factors such as your down payment size, business history, and overall financial health to assess your application. We work with lenders that offer flexible options tailored for self-employed individuals with lower stated incomes.

Additional Documentation Requirements

For a typical borrower, lenders often require a letter of employment and recent pay stubs to confirm and calculate income. For self-employed applicants, lenders will either take an average of two years’ income or use your most recent annual income if it’s lower.

When submitting your mortgage application, you will need to provide the standard documentation in addition to the following:

- For Incorporated Businesses: Two years of accountant-prepared financial statements (Income Statement and Balance Sheet)

- Personal NOAs and Tax Returns: Two most recent years, if available.

- Business Bank Statements: Potentially 12 months

- Confirmation of HST/Source Deductions: Ensure they are current

- Most Recent Invoices

- Recent Contracts

- Business Website or Explanation of How You Source Your Business

Our Commitment to Self-Employed Clients

With over 23+ years of real estate and banking experience, we understand the unique challenges self-employed individuals face when securing a mortgage. Our goal is to provide you with the support and guidance you need to navigate this process successfully.

If you’re self-employed and looking to qualify for a mortgage, or if you simply have questions for when you are ready in the future, please don’t hesitate to reach out today! I would be happy to work with you to ensure you have the necessary documentation, understand your options, and can obtain a pre-approval to help you understand how much you qualify for.

Got Any Mortgage or Real Estate Questions?

Always here to help.

Kiruban Kana

Ex-Banker | Vice President & Mortgage Agent Level II

C: 416-219-4820 |

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