Self-Employed and Want a Mortgage? Here’s What Actually Matters
If you’re self-employed and thinking about buying a home, you’ve probably heard some version of this:
“It’s harder for self-employed people to get a mortgage.”
True… but incomplete.
The real story is this: self-employed mortgages aren’t harder — they’re just different. And when they’re structured properly, they can be just as strong as salaried applications.
Let’s break down what lenders actually look at and how self-employed buyers in BC can position themselves for success.
1. How Lenders View Self-Employed Income
Unlike salaried employees with predictable paycheques, self-employed borrowers have income that can fluctuate — which means lenders focus on consistency, sustainability, and documentation.
Most lenders will ask for:
Two years of personal tax returns (T1 Generals)
Notices of Assessment
Financial statements (if incorporated)
Confirmation your business is active and stable
They’re not looking for perfection. They’re looking for a pattern.
If your income trends upward or remains steady, that works in your favour — even if one year looks a little lighter than the other.
2. The “Tax Efficient vs Mortgage Friendly” Problem
Here’s the classic self-employed dilemma:
You minimize income to reduce taxes…
Then the lender says, “Great tax strategy — but now you don’t make enough.”
This is extremely common and completely fixable with planning.
Mortgage qualification is based on declared income, not cash flow. That means:
Write-offs can reduce qualifying income
Retained earnings may or may not count, depending on the lender
Timing matters — sometimes a single tax year makes all the difference
A good mortgage strategy balances tax efficiency with future borrowing goals. You don’t need to overhaul your business — you just need alignment.
3. Incorporated vs Sole Proprietor: Does It Matter?
Yes — but not in a “good vs bad” way.
Sole proprietors are typically assessed on net income
Incorporated business owners may have more flexibility, depending on:
Salary vs dividends
Retained earnings
Length of incorporation
Some lenders are conservative. Others specialize in self-employed borrowers and know how to properly interpret business income.
The lender choice matters as much as the numbers themselves.
4. What If Your Income Doesn’t Quite Fit the Box?
This is where many self-employed buyers assume they’re out of options — and they’re usually wrong.
There are alternative and stated-income programs designed specifically for:
Business owners
Contractors
Commission-based earners
Newer self-employed borrowers
These programs may require:
Larger down payments
Strong credit
Proof your business is viable (bank statements, invoices, contracts)
They’re not a last resort — they’re a tool. And for many buyers, they’re the bridge to homeownership while their business continues to grow.
5. Why Self-Employed Buyers Benefit From Independent Advice
This is where working with an independent mortgage broker really matters.
Banks tend to:
Apply rigid formulas
Decline files that don’t fit cleanly
Offer limited alternatives
An independent broker:
Matches your income structure to the right lender
Knows which lenders are self-employed-friendly
Helps plan ahead — not just apply and hope
For self-employed buyers, the strategy behind the mortgage is just as important as the rate.
Final Thoughts
Being self-employed doesn’t make you a risky borrower — it makes you a complex one. And complex files simply need smarter structuring.
With the right preparation, documentation, and lender selection, self-employed buyers in BC can absolutely qualify for competitive mortgage options — without compromising their business or their sanity.
If you’re self-employed and thinking about buying, refinancing, or just want to understand your options before making a move, getting advice early can save time, stress, and expensive surprises later.
