Self Employed Mortgages in British Columbia

Self Employed Mortgage Options, Qualifications and Requirements

Nearly 18% of all income earners in British Columbia are self-employed. *source

Construction, Technical, and Healthcare are the 3 largest self-employed demographics in British Columbia.

So, why is it so hard for this growing group of entrepreneurs to get a mortgage?

The main issue is that their income is often hard to prove.

Many self-employed have high incomes, and lots of write-offs to reduce their taxes.

Because it is difficult to navigate which lenders specialize in self-employed mortgages, this is one case where using a mortgage broker has obvious advantages.

Are you an incorporated or sole proprietor? Different self-employed mortgage rules for different company structures.

We work with lenders who understand your situation. We have lenders who will accept a 5% down payment on a purchase, even if you show a low taxable income. We also have lenders who can refinance up to 90% of the home's value with little or no income verification required.

Different Loan Types for Self-Employed Canadians

If you're a self-employed Canadian, you have several mortgage loan options.

CMHC Self-Employed Mortgage Program - Less than 2 years self-employed! *NEW

5% Downpayment
Only some lenders use this program - Scotia, HomeTrust, Strive, and First National.
Have you been self-employed for less than 2 years and filed with Canada Revenue Agency?
- You worked as a T4 employee for a Tech firm as an IT programmer and are now a programmer for your own company.
- Same job as a T4 employee in the past, now a consultant doing the same job?
- Bought an existing business

Insured Stated Income Program - Sagen Business for Self (Alt. A) or Canada Guaranty - Low Doc Program

10% downpayment - 5% your own money, 5% can be gifted - borrowed money
Can be used with the Purchase Plus Improvements (building renovations into the mortgage) and Second Home program
No commission income - Sorry Realtors
Business Proof: Must verify business history and operation for at least 2 years.
Owner-Occupied Only: Applies to owner-occupied properties, including rental units.
Exclusions - Not for vacation rentals, other rentals, or second homes.
No previous bankruptcies or commission-based self-employment.

Non Insured Stated Income Mortgages

Large Down Payment: Requires 35% or more.
Income Declaration: No income verification is needed; you state your income.
Lender Variability: Banks like TD, RBC and BMO are unlikely to offer this without income verification.

Mortgage Lender Types for Self-Employed Canadians

There are 3 primary types of lenders - A, B, and Private.

"A" Lenders - Banks

Strict Criteria: Includes CIBC, RBC, TD, Scotiabank, BMO, and National Bank. "Balance Sheet" Banks.
Less Strict Criteria: Includes RMG, RFA, CMLS, Strive - CREDIT UNIONS.
Use the Mortgage Stress Test: Your rate PLUS 2% if less than 20% downpayment.
No Stress test at some lenders: more than 20% downpayment / equity. A few Credit unions will do 15% downpayment!
Must prove stable income and good credit history.
Required Documents Notice of Assessment for 2-3 years, financial statements, and articles of incorporation (if incorporated)

"B" Lenders

Less Strict Requirements: Includes Radius, Equitable Bank, HomeTrust, MCAP, Merix Financial, RMG, CMLS
Higher Rates: Typically higher interest rates due to less strict qualifications.
Mortgage Broker Needed: Usually requires navigating through a licensed broker.

Private Lenders

High Interest Rates:** Ranges from 7% to 18%.
Additional Fees:** Broker and loan setup fees of 1% to 3%.
Flexible Approval:** Less strict than "A" and "B" lenders, but higher costs.

Tips I use to boost your income or help you qualify:

Are you sole proprietor? I can gross up your income by 15%-20% depending on the lender
Can remove big car payments if they are coming out of your business bank account.

CONFUSED WHERE TO START?

Getting a mortgage as a self-employed Canadian can be less stressful with the right knowledge.

There are many tailored options to help you buy your dream home.