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How to get a mortgage if you’re self-employed

You'll need to show steady income for at least 2 years to get approved.

If you’re self-employed, you’ll need a steady work history and at least 2 years of tax returns to get a mortgage — and you’ll need to watch out for lenders who charge high-interest rates for self-employed workers.

Can I get a mortgage if I’m self-employed?

Yes, though you’ll need to be able to prove your income. You’ll likely need to provide your tax returns from at least the past two years, and some lenders may also ask for bank statements showing what you’ve made so far this year.

Lenders will be looking for evidence that your income is steady or slowly increasing — if you made less money last year than you did the year before, that can hurt your chances of approval.

Speak to a mortgage broker to find the best lender

Mortgage brokers are home loan experts. They have access to a range of lenders, and can help you figure out which lenders are most likely to work with self-employed borrowers.

Mortgage brokers generally earn a commission from your lender, which means the service is free to you. However, some brokers will be paid directly by their clients, so ask about any fees before getting started.

Self-employed friendly mortgage lenders

Name Product Interest Rate (APR) Loan Term Min. credit score Provincial availability
Tangerine Mortgages
2.14%
5 Year Fixed Rate
620
All of Canada
Get a cash Bonus of $1,500 (on an approved mortgage of at least $250,000 that funds within 120 days of your application submission). Apply by August 20, 2021.

Get competitive rates and make annual lump sum prepayments up to 25% of your original mortgage amount with a Tangerine mortgage.
Breezeful Mortgages
1.64%
5 Year Fixed Rate
600
All of Canada
Breezeful is a 100% online mortgage broker that connects borrowers to competitive rate offers from over 30+ banks and mortgage lenders.
Homewise Mortgages
Varies
Varies
600
Not available in Quebec
Homewise's personal advisors can get you mortgage rates from over 30 banks and lenders.
intelliMortgage Mortgages
1.42%
5 Year Fixed Rate
680
AB, BC, NL, ON, PE
intelliMortgage is an online mortgage broker that works with over 100+ banks and mortgage lenders across Canada.
Loans Canada Mortgages
1.79%
5 Year Fixed Rate
400
All of Canada
Loans Canada connects borrowers with a mortgage broker in their area. Bad credit, EI and CERB applicants are considered.
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How can I increase my chances of getting approved?

A good credit score, consistent work history going back at least two years and a savings account that can cover several months of mortgage payments if your work slows down will help you increase your chances of getting approved.

Example: John applies for his first mortgage

John has worked as a freelance writer for the past 3 years and is ready to buy his first home. He has $10,000 in savings and is able to cover the cost of his rent and monthly expenses with his income. The lender he chose looked at his post-tax income and felt confident that he could afford monthly payments of $810.

This allowed John to borrow $150,000 at an interest rate of 4.94% for 30 years. Since this was a variable rate loan that also included fees, he chose to buy a smaller home and borrow only $135,000. This allowed him to make his monthly payments without having to worry when his income fluctuated down.

Comparing mortgages for self-employed workers

When choosing a loan, consider:

  • Documentation required. Look for a lender who is willing to take tax returns in lieu of pay stubs. If your business has only recently started turning a profit, look for a lender who only requires 1 or 2 years of tax returns.
  • Interest rate. Some lenders will charge higher interest rates for self-employed borrowers, so take time to compare as many lenders as possible to get the best rate.
  • Fees. Factor any fees associated with the loan into the cost when comparing lenders.
  • Interest type. Consider whether the flexibility of a variable rate or the certainty of a fixed rate is better suited to your circumstances, and factor in where the market’s at right now.

Pros and cons of a mortgage for self-employed workers

Pros

  • Availability. Mortgages are available for all types of freelancers and independent business owners, including those with fluctuating hours and job responsibilities. As long as your income is taxed and you can show proof of what you make, most lenders will consider you.
  • Investment. Money you pay towards a mortgage is invested in your home, and you can get it back when you sell the house.

Cons

  • Higher fees and rates. Some lenders may charge you extra fees or higher interest rates for the higher risk they perceive you to have.
  • You may need an accountant. Lenders could request the contact details of an accountant to verify your income. If you don’t have an accountant, you may want to consider consulting one to help you with your documentation.

What are the risks?

Self-employed borrowers face unique risks when applying for a mortgage, including:

  • Damaged credit. Do your research and only apply to mortgages you’re sure you want. Applying for many and being rejected will have a negative impact on your credit score and history. Before filling out an application, make sure that the lender is willing to consider self-employed applicants.
  • Defaulting. If your income fluctuates from month to month, you run the risk of defaulting on your mortgage after a slow month. Take out a mortgage you can comfortably afford and keep a savings account with a few months’ income.

Bottom line

If you’re self-employed and thinking about buying a house, you’ll need to jump through a few extra hoops, but it is possible. Gather all of your financial documents before getting started, and compare mortgages from different lenders to make sure you’re getting the best rate.

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