Self-Employed Mortgages in Ontario

Most lenders want two years of history, verified through your tax returns. Some will consider one year, or even less, if you were previously employed in the same field, and alternative programs can work from bank statements instead of returns.

Traditional lenders start with your two most recent T1 Generals and Notices of Assessment and usually average the two years. Which line they use, and what they add back, depends on the lender and how your business is set up. If the business is incorporated they may also look at the T2 corporate returns and any T4 or T5 slips you take out of it.

The word doing the work there is net. It is the number after everything you have written off, which is rarely the number you think of as your income.

Usually two years of T1 Generals and Notices of Assessment, confirmation your taxes are paid, business registration or articles of incorporation, and sometimes financial statements or business bank statements.

The taxes-paid piece catches people out more than anything else on that list, so it is worth checking early.

Very common for business owners who write off properly. There are alternative programs that use your bank statements, typically six to twelve months of deposits, to evidence real cash flow rather than relying only on the returns.

They can, and this is the trade nobody explains at the time. Traditional lenders qualify you on net income, so the deductions that lower your tax bill also lower your borrowing power. It is the same money being counted two different ways by two different institutions.

Sometimes. Certain lenders allow a gross-up or add-back of specific non-cash expenses, such as capital cost allowance or business-use-of-home, which raises the income they will qualify you on. Which expenses count, and by how much, varies enough between lenders to be worth checking before you apply rather than after.

Both qualify. The paperwork differs, a corporation may need company financials while a sole proprietor leans on personal returns, but there are programs for each. The structure matters far more to your accountant than to your mortgage.

Not necessarily. Qualify with a prime lender and you are on the same rates as any salaried borrower. Alternative programs do carry higher rates, and they are often used as a two or three year step before moving back to prime rather than as a permanent home.