Overview
Securing a mortgage as a self-employed individual in Canada is entirely possible but involves more complex documentation and eligibility requirements compared to salaried applicants. Lenders focus on verifying stable income and financial responsibility, and there are specialized programs and insurance products tailored for business owners, freelancers, and contractors.
Key Requirements for Self-Employed Mortgages
Most Canadian lenders require the following for self-employed mortgage applicants:
- Minimum 2 years in business or self-employment, demonstrated by business tenure or industry experience.
- Proof of income typically via:
- Personal tax Notices of Assessment (NOA) for the past 2-3 years
- T1 General tax returns
- Business financial statements, sometimes with an accountant’s review
- Proof that HST/GST is paid up to date
- Business licence or incorporation documents
- Good credit history is essential, especially if income verification is limited.
- Down payment requirements vary:
- With full income proof: as low as 5% (same as salaried applicants if insured)
- With stated income programs or limited documentation: typically 10%–35%, depending on the lender/program
- Proof that down payment is not gifted
- No tax arrears
Canadian Government Programs and Mortgage Insurance
CMHC Self-Employed Program
- Available to various business structures: sole proprietors, partnerships, and incorporated companies.
- Offers flexibility for those with less than 24 months in business, given supporting documentation.
- Income can sometimes be "grossed up" by 15% or use an "add-back" approach for certain eligible deductions.
- Mortgage loan insurance is available at no additional cost for self-employed borrowers who qualify.
Sagen (formerly Genworth Canada) – Business for Self (Alt. A) Program
- For self-employed with at least 2 years in business, but without traditional income proof.
- Allows for up to 90% loan-to-value for purchases.
- Income declaration must be reasonable for the business type and tenure.
- No tax arrears allowed, and at least 5% of the down payment must come from the applicant’s own resources.
Canada Guaranty – Low Doc Advantage
- Designed for self-employed borrowers with limited documentation, offering a simplified process for mortgage insurance.
Major Canadian Bank Offerings
| Bank | Key Features for Self-Employed Borrowers | Required Documentation |
|---|
| RBC | Finance up to 80% (no insurance) or 95% (with insurance); stated income option for strong credit | NOA, proof of self-employment, possibly more |
| National Bank | Minimum 2 years business, property value limits ($1.5M), up to $750K loan | 2 years of sound financial and credit history |
| Meridian Credit Union | Flexible proof-of-income options for self-employed applicants | Custom, depends on application |
Provincial Variations
- Down payment and qualifying rules are generally federal but some programs or maximum loan amounts may vary by province (e.g., property value and loan limits in major cities like Toronto, Vancouver, Calgary).
- New Home Warranty requirements may differ in the territories (Yukon, NWT, Nunavut) for new construction.
First-Time Homebuyer Programs
Self-employed Canadians can access all major first-time homebuyer incentives if they meet general eligibility:
- First-Time Home Buyer Incentive: Shared equity program from the federal government.
- Home Buyers’ Plan (HBP): Withdraw up to $35,000 from RRSPs tax-free for a down payment.
- Provincial rebates: Land transfer tax rebates in Ontario, BC, and PEI.
Comparison Table: Self-Employed Mortgage Program Features
| Program | Min. Time in Business | Income Verification | Max. LTV | Min. Down Payment | Insurance Option |
|---|
| CMHC Self-Employed | 2 years (flexible) | Tax returns, NOA, gross-up | 95% | 5% | Yes |
| Sagen Business for Self (Alt. A) | 2 years | Stated income, reasonable | 90% | 10% | Yes |
| Canada Guaranty Low Doc Advantage | Varies | Limited documentation | 90%–95% | 5%–10% | Yes |
| Traditional Bank (with full docs) | 2 years | Tax returns, NOA | 95% | 5% | Yes |
Actionable Next Steps & Recommendations
- Gather documentation: Prepare at least 2 years of tax returns, NOAs, business financials, and proof of down payment.
- Check your credit: A strong credit history is critical—review your credit report and resolve any issues.
- Consult a mortgage broker or lender: Specialized brokers can help navigate self-employed requirements and shop for the best deal. Consider using theratefinder to compare rates and access lenders familiar with self-employed applicants.
- Apply through theratefinder: For tailored, competitive mortgage solutions—and a streamlined, multi-step application process—start at theratefinder.ca/onboarding.
Summary
Getting a mortgage as a self-employed Canadian is entirely feasible, but requires more documentation and planning. Take advantage of dedicated lender programs, and leverage government and insurance offerings for the best results. Using a platform like theratefinder can help you compare all your options, ensuring you secure the most competitive rate and terms for your situation.