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How To Get A Mortgage When You’re A Self-Employed Home Buyer?

General Beata Gratton 22 Aug

How To Get A Mortgage When You’re A Self-Employed Home Buyer?

When you’re self-employed and you want to buy a home, you fill out the same mortgage application as everyone else. Mortgage lenders also consider the same things when you’re a self-employed borrower: your credit score, how much debt you have, your assets and your income.

So what’s different?

 

When you work for someone else, lenders go to your employer to verify the amount and history of that income, and how likely it is you’ll keep earning it. When you’re self-employed, you are required to provide the necessary documentation to verify that your income is stable.

 

What Are Mortgage Lenders Looking For?

 

You can expect lenders will want proof of the following things before considering you for a mortgage:

 

  • Income stability
  • The location and nature of your self-employment
  • The financial strength of your business
  • The ability of your business to generate sufficient income in the future

 

What Documents Do You Need To Provide?

 

To start the home buying process, you’ll need a history of uninterrupted self-employment income, usually for at least two years. Here are some examples of documents a lender might ask for.

 

Employment Verification

  • A professional organization that can attest to your membership
  • Any Province or business license that you hold
  • Evidence of insurance for your business
  • A Doing Business As (DBA)

Income Documentation

Have proof of steady, reliable income, and you’re one step closer to getting approved for a mortgage. Note that even if you make consistent money now, your past income will also influence your ability to get a loan. Your lender will ask for the following:

 

  • Personal tax returns (T1 General, Notice of Assessments)
  • Profit and loss statements, which would include T2’s
  • Bank statements, which are monthly or quarterly documents that help your lender verify that you have sufficient funds to cover a down payment.

 

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