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by Pine

The ultimate guide to mortgage options for self-employed Canadians

Securing a mortgage as a self-employed individual may require a little extra effort, but with careful planning and the right advice, it's entirely within your reach.

Empowering Self-Employed Canadians to Navigate the Homeownership Journey

Navigating the world of mortgages can often feel like a daunting task, particularly for the self-employed. Without the conventional proof of income that comes with traditional employment, securing a mortgage might seem like an uphill battle. But fear not, self-employed Canadians! This guide is designed to illuminate the path for you. 

Understanding your mortgage options is crucial when you're self-employed. Why, you ask? Because when you're your own boss, the rules of the game can change slightly. Traditional banks often view self-employed individuals as higher risk due to the variability of their income. However, with the right preparation and knowledge, you can show lenders that you're just as reliable a borrower as anyone else.

In this guide, we will walk you through the intricacies of mortgage options for self-employed Canadians. From defining what self-employment looks like in Canada, to explaining the requirements for securing a mortgage, we've got you covered. We'll delve into the different mortgage options available to you, discuss special programs designed to aid the self-employed, and provide useful tips to enhance your chances of mortgage approval.

Whether you're a freelance graphic designer, a contractor, or you run your own retail business, this guide is dedicated to helping you navigate the mortgage process. So, let's dive right in and demystify the world of mortgages for the self-employed.

Understanding self-employment in Canada

Before we delve into the complexities of mortgages, let's first understand what self-employment looks like in Canada. A self-employed individual is someone who earns income directly from one's own business, trade, or profession rather than as a specified salary or wages from an employer. This encompasses a variety of professions - from freelance writers, consultants, and contractors, to owners of businesses both big and small. 

According to Statistics Canada, as of 2020, about 2.9 million Canadians were self-employed, accounting for approximately 15% of the total workforce. This number has been on an upward trend, as more and more Canadians are embracing the flexibility, autonomy, and potential financial rewards that come with self-employment.

However, the nature of self-employment can introduce some unique hurdles when it comes to getting a mortgage. Traditional lenders, like banks, tend to favour borrowers with stable, consistent income - a characteristic that isn't always associated with self-employment. This preference stems from the perceived risks tied to the income variability that often accompanies self-employment.

But let's be clear: while securing a mortgage may be more challenging for those who are self-employed, it is by no means an insurmountable obstacle. In fact, there are a number of mortgage options designed specifically with self-employed individuals in mind, and having a good grasp of these can greatly enhance your prospects of securing that all-important mortgage approval. In the coming sections, we'll delve deeper into these options, providing you with a comprehensive guide to help you navigate your path to homeownership.

Requirements for self-employed individuals to get a mortgage

Securing a mortgage as a self-employed individual in Canada requires a slightly different set of criteria compared to traditionally employed individuals. Let's unpack these key requirements:


Given the higher risk associated with self-employed mortgages, applicants should anticipate providing an expanded set of documentation compared to traditional mortgage applications. Here are some key documents typically required for a self-employed mortgage application:

Self-employed income – Sole Proprietorship/Partnership

  • Recent two years’ T1 Generals (all pages)
  • Recent two tax years’ Notice of Assessments
  • Business license 
  • Confirmation of income tax payment (if you owe tax on your last year NOA)

Self-employed income – Corporation

  • Recent two years’ T1 Generals (all pages)
  • Recent two tax years’ Notice of Assessments
  • Articles of Incorporation
  • Confirmation of income tax payment (if you owe tax on your last year NOA)

Income verification: 

The first and perhaps most significant hurdle for self-employed individuals is income verification. Lenders need to be confident that you have a stable income and the ability to make your mortgage payments. This can be more complex for self-employed individuals due to the nature of their income, which can be irregular or come from multiple sources. Usually, you'll need to provide two years' worth of income tax returns, financial statements, contracts, and other documentation that can verify your income.

Credit score

A strong credit score is essential for anyone applying for a mortgage, but it's especially important for self-employed individuals. It helps lenders see that you are reliable and have a history of paying your debts on time. Generally, a credit score of 650 or above is considered good, but the higher your score, the better your chances of approval.

Down payment:

In Canada, the minimum down payment required can range from 5% to 20%, depending on the price of the home. For self-employed individuals, a larger down payment can often improve your chances of approval as it reduces the risk for the lender.

Debt service ratios:

Lenders use two ratios to determine how much you can afford to borrow: the Gross Debt Service ratio (GDS) and the Total Debt Service ratio (TDS). The GDS ratio calculates the percentage of your income needed to cover all housing costs, while the TDS ratio includes all other debts. To qualify for a mortgage, your GDS should ideally be below 35% and your TDS below 42%.

Understanding these requirements is the first step in your mortgage journey. While it may seem daunting, remember that there are numerous resources and professionals who can help guide you through this process.

Special programs for self-employed Canadians

In recognition of the unique financial situations of self-employed individuals, there are several programs in Canada specifically designed to make the path to homeownership more accessible. Here are a couple worth exploring:

Canada Mortgage and Housing Corporation (CMHC) Self-Employed Program:

The CMHC offers a program specifically tailored to self-employed individuals who have been running their business for less than two years. This program accepts a broader range of documents for income verification, making it easier for newer self-employed individuals to qualify for a mortgage. 

Other federal or provincial programs:

There are various other programs available at the federal and provincial levels that can provide assistance. These programs vary by region and change over time, so it's worth researching or consulting with a mortgage professional to see if there are any current programs you may be eligible for.

While these programs are designed to assist you, remember that it's still important to prepare your finances as thoroughly as possible. This includes maintaining a strong credit score, minimizing your debt load, and keeping your business records well organized.

Tips to improve mortgage approval chances for self-employed Canadians

Getting a mortgage while self-employed might seem daunting, but with careful planning and preparation, it's entirely achievable. Here are some tips that can enhance your chances of getting your mortgage application approved:

Keep financial records clean and organized:

An important factor in getting a mortgage is your ability to demonstrate consistent income. As a self-employed person, your income may vary, so it's crucial to keep clear, detailed financial records. Regularly update your bookkeeping and ensure all business expenses and income are properly documented. 

Maintain a strong credit score:

A good credit score can significantly improve your chances of getting a mortgage. Always pay your bills on time, try to keep your credit card balances low, and avoid applying for new credit frequently.

Balance personal and business expenses:

Lenders often look at your debt-to-income ratio, which is your monthly debt payments divided by your gross monthly income. By keeping your business and personal expenses separate and minimizing your debt load, you can improve this ratio.

Consider a larger down payment:

If you can afford it, consider making a larger down payment. This can reduce the loan-to-value ratio, which in turn reduces the risk for the lender and can lead to better mortgage terms.

Seek professional advice:

A mortgage broker or financial advisor who has experience with self-employed individuals can be an invaluable resource. They can provide advice tailored to your unique situation and help you navigate the complex mortgage landscape.

Securing a mortgage as a self-employed individual may require a little extra effort, but with careful planning and the right advice, it's entirely within your reach.


Homeownership as a self-employed individual in Canada is certainly achievable. This guide has outlined how to understand the requirements, explore mortgage options, take advantage of special programs, prepare effectively, and possibly collaborate with a mortgage broker for a smoother journey.

The key to success lies in your hands: maintaining strong financial health, keeping organized records, and being open to professional advice. Remember, securing a mortgage is just a step in your larger financial journey. Keep exploring and learning to make decisions that align with your personal and business goals.

We hope this guide has been insightful and serves as a valuable tool in your journey towards homeownership. Best of luck!

Question? We've got answers.

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