I’m Self Employed – Can I Qualify for a Mortgage?

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Being self-employed has plenty of benefits – working for yourself, tax write-offs, and freedom of your schedule. But when it comes to applying for a mortgage, it’s often more difficult than one would like. Regardless of what you have heard though, there are options available to help smooth over the process and get you into your dream home faster. Let us show you how to get started to help get your self-employed mortgage process rolling.

Organize Financial Documents

One thing self-employed workers need to be good at is being organized, especially around tax time. When applying for a mortgage it’s no different. You will need to get all of your documents ready and in an organized fashion for the lenders. We recommend collecting at least two years worth of tax returns and financials, plus your Notice of Assessments and T1 generals, your business licence, and any Articles of Incorporation or documents that prove you own your business and describe its structure. You may also want to collect bank statements and other documents that can help demonstrate that you have a steady income necessary to pay for a mortgage.

Providing Business-Related Information

Lenders will want to know specifics about your business such as the type, industry, number of employees etc. The more information you provide about your business and the stability of your income, the easier the process will be. Talk to an accountant or financial advisor on how you can prepare your income statements and operating expenses to better improve your chances.

Proof of Taxes

If you have fallen behind on paying your tax returns, now would be the time to talk to an accountant and get up to speed. Proof of taxes will directly affect your ability to qualify for a mortgage.

Credit Score

Before you begin to apply, find out what your credit score is. It is important to have a good understanding of where your credit stands and if we need to develop some action plans to get your credit rating back on track and in a position to qualify for a mortgage.

Finding Options

Lenders often have several types of options available for self-employed clients. Many offer the standard mortgage with the minimum 5% down payment which is qualified based upon the two-year average income. There is also insured mortgage options with a 10% down payment where the business owner must prove their income potential is realistic and their credit profile is clean to qualify. And for those who have a 20% down payment saved but do not meet the usual income requirements, you may have higher rate or alternative options available to you. You won’t know exactly what you can qualify for if you don’t talk to a mortgage advisor, so put your documents together and reach out to a professional. Whatever your financial situation, it helps to talk to a mortgage advisor who can analyze your finances and find you the right mortgage options and lenders for your situation. Contact The Mortgage Advisors to learn everything about qualifying for a mortgage and more.