Harpreet’s perspective
Real questions. Real properties. Real numbers.
Being self-employed can be great. You control your business, build your own income and hopefully don't have to ask anyone for permission to take Friday afternoon off. Then you apply for a mortgage. Suddenly everybody wants to know everything: T1 Generals, Notices of Assessment, corporate financial statements, business ownership, income history, and sometimes additional supporting documents.
And you're sitting there thinking: ‘My business makes money. Why is this so complicated?’ Welcome to self-employed mortgage qualification.
The First Thing I Want to Understand Is Your Business
Before I start calculating how much mortgage you may qualify for, tell me what you actually do. How long have you been self-employed? Sole proprietor or incorporated? How does the business earn money? How do you pay yourself? Has revenue been growing? Does your income fluctuate? Are there legitimate business expenses affecting the taxable income showing on your returns?
I don't want to look at one number and decide your entire mortgage from it. I want to understand the story behind the number.
Your Accountant and Your Mortgage Lender Have Different Jobs
Your accountant may legitimately help structure your business and taxes efficiently. Your mortgage lender is trying to determine how much sustainable qualifying income can reasonably be used to support the mortgage. Those two objectives don't always produce the same number.
That's why a successful business owner can sometimes look surprisingly average on a personal tax return. Depending on the lender and mortgage program, there may be different approaches to evaluating self-employed borrowers and the documentation required. This is where having more than one lending path can matter.
What Documents Should You Expect?
Every situation and lender can be different, but I generally want to understand your recent personal tax returns and Notices of Assessment and, where applicable, corporate financial information and supporting business documentation. If additional information helps explain the business, we'll discuss that too.
My favourite self-employed mortgage file is not necessarily the one with the biggest income. It's the one where I can clearly understand: ‘This is the business. This is how it makes money. This is what the borrower earns. And this is why the income makes sense.’ Clarity makes underwriting much easier.
Don't Wait Until You Find the House
This is probably my biggest advice for self-employed borrowers. Talk to me before you start seriously shopping. If something in your income needs explanation, I'd rather discover it three months before you buy than three days before your financing condition.
Maybe everything is perfect. Great. Maybe we need additional documentation. Fine. Maybe another year of business history puts you in a stronger position. That's useful to know too. Self-employed doesn't mean ‘difficult mortgage.’ It simply means I may need to understand more than a paystub and employment letter.
Bring me the business. Bring me the financials. Bring me the tax documents. And tell me what you're trying to buy. I'll do the mortgage detective work. Because being self-employed shouldn't mean you have to become a mortgage underwriter too.