Yes, self-employed Canadians can qualify for a mortgage. The process can require more documentation than it does for a salaried employee because lenders need to confirm that your income is stable and sufficient to support the mortgage.
Being self-employed does not automatically make it harder to buy a home, but it can make choosing the right lender and preparing your application more important.
What Do Lenders Look for If You’re Self-Employed?
Lenders generally want to understand three things:
- how long you have been self-employed
- how much income you earn
- whether that income is consistent enough to support your mortgage payments
The Financial Consumer Agency of Canada notes that self-employed mortgage applicants may be asked for Notices of Assessment from the Canada Revenue Agency for the past two years. Lenders or mortgage brokers may also request additional financial information depending on the application.
Your credit history, existing debts, down payment, property, and overall financial situation will also affect your qualification.
Why Can Self-Employed Income Be More Complicated?
One challenge is that the income shown on your tax return may not fully reflect the financial strength of your business.
Many self-employed Canadians legitimately deduct business expenses to reduce their taxable income. While that can make sense from a tax perspective, a lower reported income can sometimes affect how much mortgage financing you qualify for.
There are mortgage programs designed with this issue in mind. CMHC, for example, has a self-employed mortgage loan insurance program that allows certain approaches to recognizing self-employment income, including eligible income adjustments in some circumstances.
What Documents Might You Need?
Every lender is different, but a self-employed mortgage application may require documents such as:
- CRA Notices of Assessment
- personal tax returns
- business financial statements
- business registration or incorporation documents
- bank statements
- proof of your down payment
- information about existing debts and assets
Having these documents prepared before applying can make the mortgage approval process much smoother.
How Long Do You Need to Be Self-Employed to Get a Mortgage?
There is no single rule that applies to every lender or every borrower.
A longer history of self-employment can make it easier to demonstrate consistent income, which is why lenders commonly review multiple years of tax information. However, borrowers with a shorter business history may still have options depending on their previous experience, income, down payment, credit profile, and the lender’s guidelines.
This is one area where working with a mortgage broker can be particularly valuable because lender requirements can differ significantly.
Do Self-Employed Borrowers Need a Bigger Down Payment?
Not always.
The amount of down payment required depends on the mortgage and your overall application. However, the Government of Canada notes that lenders may sometimes require a larger down payment from self-employed borrowers.
If your down payment is below 20 percent, mortgage loan insurance will typically be required, subject to the applicable insurer and lender requirements.
Do Self-Employed Canadians Still Have to Pass the Mortgage Stress Test?
In many cases, yes.
Federally regulated lenders apply a minimum qualifying rate to uninsured mortgages to ensure borrowers can afford their mortgage if circumstances change.
Your lender will also consider your housing costs, debts, income, and overall ability to make the required payments.
Can a Mortgage Broker Help If You’re Self-Employed?
Absolutely.
Self-employed borrowers often benefit from having access to multiple lenders because not every lender assesses business income in exactly the same way.
A mortgage broker can review your income structure, tax documents, credit, down payment, and other financial information before determining which lenders may be a good fit.
Instead of assuming that one bank’s answer represents your only option, a broker can help you explore a wider range of mortgage solutions.
Frequently Asked Questions
Is it harder to get a mortgage when you’re self-employed?
It can involve more documentation, but self-employed Canadians regularly qualify for mortgages. The main challenge is usually proving your income in a way that satisfies the lender’s requirements.
Can I get a mortgage if I own an incorporated business?
Potentially, yes. Your lender will need to determine how your personal and business income should be assessed, and additional corporate documentation may be required.
Can I qualify if my taxable income is lower because of business deductions?
Possibly. Some mortgage programs and lenders have methods for assessing self-employed income that go beyond simply looking at one line on your tax return. The available options depend on your financial situation and the lender’s guidelines.
Should I get pre-approved before looking for a home?
Yes. A mortgage pre-approval can be especially helpful when you are self-employed because it gives you an opportunity to review your documentation and potential borrowing amount before making an offer.
Getting a Mortgage When You’re Self-Employed
Running your own business should not automatically prevent you from becoming a homeowner.
The key is presenting your income properly and finding a lender whose qualification guidelines fit your situation.
If you are self-employed and planning to buy a home, refinance, or renew your mortgage, My Great Rates can help you review your options and find a mortgage solution that makes sense for your finances.
