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Let’s face it: being self-employed means wearing many hats – accountant, marketing manager, CEO, Trades and sometimes even office custodian. But when it comes to getting a mortgage, you shouldn’t have to wear the hat of a financial magician. While the path might be different from traditional employees, securing a mortgage as a self-employed individual is absolutely achievable with the right preparation.
First, let’s demystify why lenders seem to scrutinize self-employed applications more closely. It’s not personal – they simply need to verify stable income in a situation where regular paystubs don’t exist. Think of it as explaining to your grandmother how you make money from your YouTube channel – it takes a bit more detail than “I work at the bank.”
The key to success lies in painting a clear picture of your financial stability. Here’s what you need to gather:
– Two to three years of Notice of Assessments (NOAs)
– Personal and business tax returns
– Financial statements prepared by a qualified accountant
– Bank statements showing regular income deposits
– Contracts with long-term clients (if applicable)
– Business license or incorporation documents
– GST/HST registration and returns
Pro tip: Start collecting these documents months before you plan to apply. Nothing says “I’m organized” like having all your paperwork ready to go.
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While writing off business expenses reduces your tax burden, it also lowers your declared income. Consider working with your accountant to find the sweet spot between tax efficiency and proving sufficient income for mortgage qualification. Sometimes, paying a bit more in taxes for a couple of years before applying can significantly improve your mortgage options.
Your credit score becomes even more crucial when you’re self-employed. Aim for:
– Keeping credit utilization under 30%
– Making all payments on time
– Maintaining older credit accounts
– Limiting new credit applications
Having a larger down payment can compensate for other application weaknesses. Consider:
– Aiming for 20% or more to avoid mortgage insurance
– Using RRSPs through the Home Buyers’ Plan
– Using your FHSA funds
– Getting gift letters for family contributions
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The best time to start preparing for a mortgage application is now. Most lenders want to see at least two years of self-employment history, so use this time to:
– Build a strong business track record
– Establish consistent income patterns
– Reduce personal and business debt
– Save for a larger down payment
Remember, being self-employed doesn’t make you a riskier borrower – it just means you need to tell your financial story differently. With proper preparation and our professional guidance, you can secure a mortgage that fits your needs and helps you achieve your homeownership dreams.
Ready to start your journey toward homeownership? Contact us today. We understand the unique challenges of self-employed individuals and can help guide you through the process with expertise and care.
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After you submit the form, we’ll reach out to discuss your goals, address any questions, and provide customized, no-obligation quotes. Feel free to let us know if there’s anything else you need!
After you submit the form, we’ll reach out to discuss your goals, address any questions, and provide customized, no-obligation quotes. Feel free to let us know if there’s anything else you need!
After you submit the form, we’ll reach out to discuss your goals, address any questions, and provide customized, no-obligation quotes. Feel free to let us know if there’s anything else you need!
After you submit the form, we’ll reach out to discuss your goals, address any questions, and provide customized, no-obligation quotes. Feel free to let us know if there’s anything else you need!
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