Can self-employed people apply for a mortgage in Canada?
Yes, it is possible, however, the process may be slightly different than regular lending as lenders typically require additional documentation to assess your income stability.
Here are a few key points to consider:
- Advance payment. Be prepared to make a larger down payment. While regular individuals can get a mortgage with a 5% down payment, self-employed individuals may be required to put down 10-20% or more.
- Alternative lenders. Consider working with alternative lenders who may have more flexible criteria for self-employed individuals. However, keep in mind that their interest rates may be higher.
- Business stability. Lenders may give preference to applicants with a stable and established business. The longer your business has been operating, the more favorable it may be viewed.
- Confirmation of business income. Lenders may request additional documentation about your business's income, such as financial statements, contracts, and bank statements.
- Create a strong financial profile. Keep your personal and business finances separate, keep organized financial records, and minimize debt to present a good financial picture to creditors.
- Credit rating. A good credit score is critical for mortgage approval. Make sure your credit report is accurate and work to improve your score if necessary.
- Declared income programs. Some lenders offer declared income programs in which you declare your income without providing detailed documentation. However, these programs may have higher interest rates.
- Income documentation. Self-employed individuals typically need to provide personal income tax returns for the last two years, as well as business financial statements or notices of assessment.
- Mortgage brokers can be valuable for self-employed individuals. They have access to several lenders and can help you find the one best suited for your situation.
Home loan calculations for 20 years (example)
| Amount, $ | Rate, % | Accrued %, $ |
| 400,000 | 4.50% | 181,500 |
| 400,000 | 4.50% | 181,500 |
| 400,000 | 4.50% | 181,500 |
| 500,000 | 5.00% | 252,083 |
| 500,000 | 5.00% | 252,083 |
| 500,000 | 5.00% | 252,083 |
| 600,000 | 5.50% | 332,750 |
| 600,000 | 5.50% | 332,750 |
| 600,000 | 5.50% | 332,750 |
| 700,000 | 6.00% | 423,500 |
| 700,000 | 6.00% | 423,500 |
| 700,000 | 6.00% | 423,500 |
Can I get a mortgage loan for a self-employed person without proof of income?
Obtaining a mortgage for a sole trader without proof of income can be challenging, but not impossible. There are some lenders and mortgage products that are designed for self-employed borrowers who have irregular or difficult sources of income. However, these options may come with higher interest rates, fees, or stricter loan terms. You may also need to provide a higher down payment or a guarantor to secure your loan.
Some of the mortgage options you may want to consider if you are self-employed and do not have proof of income:
- Asset-based mortgages use your liquid assets, such as cash, stocks, bonds, or retirement accounts, to estimate your income level
- Mortgage bank statements loans, which use your bank statements instead of tax returns or pay stubs to calculate your qualifying income. Typically you will need to provide 1-2 years of personal or business bank statements
- Mortgage without income and assets. These mortgages do not require any proof of income or assets, but they are only available for investment properties that generate sufficient rental income to cover the mortgage payments.
How do I calculate my future borrowing costs?
You can calculate your future mortgage loan costs on our website. Just follow the link and enter the loan amount, interest rate, loan term, and down payment.
See the similar FAQ about Canadian banks:
- BMO calculators
- BMO cashback mortgage proposals
- BMO pre-approved mortgage
- BMO rates
- CIBC home insurance
Details of companies offering the financial services:
Meridian Credit Union
Head office’s address: 3280 Bloor Street West Centre Tower, Suite 2700 Toronto, ON, M8X 2X3
Contact center: 866-592-2226
Phone: 416-597-0165
Web-site: https://www.meridiancu.ca/
Swift code: MRCUCA21
Stock code: MRBK
BSB: 837
Meridian Credit Union
Head office’s address: 3280 Bloor Street West Centre Tower, Suite 2700 Toronto, ON, M8X 2X3
Contact center: 866-592-2226
Phone: 416-597-0165
Web-site: https://www.meridiancu.ca/
Swift code: MRCUCA21
Stock code: MRBK
BSB: 837
National Bank
Head office’s address: 600 Gauchetiere St W, 4th Floor, Montreal
Contact center: 888-483-5628
Phone: 844-394-4494
Web-site: https://www.nbc.ca/en/personal.html
Swift code: BNDCCAMMINT
Stock code: NA
BSB: 006
Lendtoday
Head office’s address: 179 King St E, Oshawa, ON L1H 1C2
Phone: 1-855-242-7732
Web-site: https://www.lendtoday.ca/
CIBC
Head office’s address: 199 Bay St, 44th Floor Toronto
Contact center: 800-465-2422
Web-site: https://www.cibc.com/en/personal-banking.html
Swift code: CIBCCATT
Stock code: CM
BSB: 010
Clover Mortgage
Head office’s address: 7 City Centre Dr Suite 150, Mississauga, ON L5B 1M5
Contact center: 1-416-674-6222
Web-site: https://clovermortgage.ca/
Mortgage Commitment Powered By Centum Financial Services FSRA
Web-site: https://mortgagecommitment.ca/
National Bank
Head office’s address: 600 Gauchetiere St W, 4th Floor, Montreal
Contact center: 888-483-5628
Phone: 844-394-4494
Web-site: https://www.nbc.ca/en/personal.html
Swift code: BNDCCAMMINT
Stock code: NA
BSB: 006
Rocket Mortgage
Head office’s address: 156 Chatham St. W., Suite 2, Windsor, ON, N9A 5M6, Canada
Contact center: 844-733-4766
Web-site: https://rocketmortgage.ca/
RBC Royal Bank
Head office’s address: 200 Bay St, 9th Floor South Tower, Toronto
Contact center: 800-769-2511
Web-site: http://www.rbc.com/canada.html
Swift code: ROYCCAT2
Stock code: RY
BSB: 003
True North Mortgage
Web-site: https://www.truenorthmortgage.ca/