Mortgage Qualifying for Self-Employed People

When it comes to qualifying for a mortgage lenders want to limit their risk as much as possible. When determining a persons risk level lenders look at credit score, debt, employment history, savings, and income. With self-employed people the income can look riskier to a lender because the 3rd party employer is removed.

Along with no "outside" employer, for tax purposes, self employed people are often creative when it comes to their pay. The two main income types of self-employed individuals is:

-T4'd income

With T4 income, taxes are paid throughout the year and it looks more similar to a traditional employees income.

-Dividend income

With dividend income, an individual decides at the end of the year what they want to claim as income and a T5 slip is used.

Many entrepreneurs want to keep as much working capital in their company as possible so they will often limit their income taken and/or claimed. They also work with their accountant to have beneficial tax strategies which might save them money on their tax bill but also might make their company look like it's struggling to a lender.

How do you qualify for a mortgage when you're self employed?

If you're thinking of getting a new mortgage in the next two years, the time to start planning is now! Complete an online application with our team and we can do a complete file review. We'll discuss your goals and current financial picture along with setting an income plan to help you get approved when the time comes.

Lender Programs

Although it can be more difficult to get approved for a mortgage when you're self-employed, there are still many options! Several of our lenders have mortgage programs designed specifically for self-employed individuals. They understand the complexities of running a successful business and try to work with self-employed individuals to get them great mortgage options!

How do I make sure I'll be approved?

• Pay all tax bills both personally and for the business (the lender will need to see confirmation)

• Don't take out additional personal debt or co-sign for your company (if a loan is attached to your personal name we have to account for it in debt servicing so keep all business debt separate).

• Contact us early to set a plan

If you own your own business and want to see if you can qualify for a mortgage Gert Martens Mortgage Team is here to help! We have years of experience helping self-employed people in Alberta and BC qualify for a mortgage! Reach out to our Grande Prairie mortgage team today!