“Why is it so difficult to get a mortgage through a bank if you’re self-employed?” That’s because many business-for-self owners minus expenses in lieu of extra income, something most banks will not recognize. Even an NOA is not indicative of your income if your business is Incorporated.
Thus, a lot of frustration when it comes to getting mortgage financing. You are a successful business owner, and yet your bank won’t approve you for a mortgage.
The lenders I work with look at credit instead of business financials and personal tax notice of assessments!
You may be newly self employed, but in the same industry for the last couple years, or you may have been self employed for many years. Whatever your situation, I have an answer for you. I myself am self employed and work closely with many lenders who have great products available for people that are successfully self employed as well as newly self employed. If you are looking ot buy a second home or vacation property, CMHC has a great program with stated income feature available for you as well.
- A clean credit history. (No bankruptcies or foreclosures. Any late payments on credit cards or loans may lower your chances of qualifying.) Credit scores over 680+ are necessary.
- Proof that you have been self-employed for two (2) years – or if only recently self employed, that you were employed in the same capacity PRIOR to going BFS (business for self). Some examples of the proof requested may be: Certificate of Incorp, registered trade name, GST Return, letter from accountant.
- Proof of down payment if a purchase.
- Appraisals can be required, not not at your expense.
With a No Income or “Stated Income” Mortgage through CMHC, you can purchase a new property with as little as 5% down, or you can or re-finance your existing home to as much as 90% of its appraised value. Income must be reasonable for career type. For instance, a waitress cannot “state” $125k per year, it is not reasonable. A Journeyman Carpenter on the other hand, $125k per year is considered reasonable.