Why self-employed income is treated differently
A salaried applicant proves income with a pay stub and a job letter. A business owner proves it with tax filings that are, quite legitimately, written to minimize taxable income. The number that makes sense at tax time is often not the number that qualifies you for a mortgage.
Most lenders start from the income reported on your Notices of Assessment, usually averaged over two years. Some will gross up certain non-taxable or under-reported income, and some will add back specific expenses such as depreciation. The rules differ by lender, which is why the same file can produce very different answers.
Documents lenders commonly ask for
Notices of Assessment
Usually the last two years, with no outstanding balance owing to CRA.
T1 Generals
The full return, not just the summary pages.
Business registration
Articles of incorporation, a master business licence or an HST registration.
Financial statements
For incorporated businesses, typically two years prepared by an accountant.
Business bank statements
Six to twelve months, to show deposits and cash flow.
Contracts or invoices
Helpful where work is contract-based or recently expanded.
Where alternative lenders fit
When traditional lenders cannot make the declared income work, alternative (B) lenders may consider a stated-income or bank-statement approach, often with a larger down payment - commonly 20% or more - and a higher rate plus a lender fee.
That trade-off can make sense as a two- or three-year bridge while you build two clean years of reported income, then move to a traditional lender at renewal. It is not automatically the right answer, and Vincent will show you the cost of it in dollars before you decide.
Things that help before you apply
Keep CRA balances paid, avoid changing your business structure right before applying, keep business and personal banking separate, and speak to your accountant about the two tax years before a planned purchase. Consistency across the file matters more than any single number.
No one can guarantee approval for a self-employed borrower - or any borrower. What is realistic is a clear read on which lender category your file fits and what documentation will be required.
Next step
The online application takes about five minutes. Once it is in, we book a short call to go over your goals, your timeline and the options that actually fit.