Self-employed mortgage guide

1. How lenders look at your income

Most lenders start with your personal tax returns and Notices of Assessment from the last two years, and use an average of the income shown after business expenses. If you've written off a lot to reduce taxes, your reported income may be lower than what you actually earn. If you own an incorporated business, lenders may also look at how you pay yourself, for example salary or dividends. Requirements differ by lender.

2. Documents to prepare

Requirements vary, and we'll tell you exactly what applies to you. Commonly requested items include:

• Two years of personal tax returns and Notices of Assessment
• Proof you've paid your taxes with no balance owing to the CRA
• Business registration or incorporation documents
• Business and personal bank statements
• For incorporated businesses, financial statements
• Proof of your down payment and where it came from

3. Your lender options

• Banks and mortgage-only lenders. Often the lowest rates, when your income can be fully documented.
• Alternative (B) lenders. More flexible when your reported income is lower or harder to document. Rates are usually higher, and many clients plan to move back to a bank later.
• Private lenders. A short-term option for unusual situations, with higher costs.

Learn more on our Lenders page.

4. How to prepare, ideally 6 to 12 months ahead

• File your taxes on time and pay any balance owing
• Talk to your accountant and to us before making big changes to how you pay yourself or write off expenses
• Keep personal and business finances separate
• Avoid taking on new debt
• Build your down payment and keep clear records of where it comes from

Common mistakes

• Applying before your latest taxes are filed
• Mixing personal and business spending
• Not telling your broker the full picture, which can lead to surprises later