Triston Rans - Calgary Mortgage Associate

I am Self-Employed

Can I Still Get the Mortgage I Need?

I am self employed and do not declare much personal income when I file my taxes. How can I qualify for a mortgage with my low income?

Good news!! Mortgage lenders and insurers have made great strides in developing financing programs specifically geared towards those of us who are self employed. In fact, in some cases qualifying for a mortgage under a self employed mortgage program may be easier than qualifying for a traditional mortgage!

If you are able to prove self employment for over 2 years more mortgage options are available to you, such as purchasing your home with a 5% down payment (on approved credit). This program uses your ‘stated’ income as a basis for mortgage eligibility. A mortgage lender will consider an income that is ’stated’ by you for your mortgage application instead of the income stated on your tax return. As long as the income stated is in line with incomes typically reported in your industry, any amount needed in order to qualify for the mortgage can be used.

For example, Lisa is a massage therapist, and her tax return shows an annual income of $20,000. For mortgage qualifying purposes, she ‘states’ an income of $70,000 to meet the income threshold needed for that particular mortgage loan amount. If, however, Lisa needed an annual income of $300,000 to qualify for her desired mortgage, her application may not be approved as that income does not represent traditional incomes for her field of work. It is important to note that when applying for a stated income mortgage you will still be required to provide your income tax Notice of Assessment from the previous taxation year to confirm all income taxes have been paid.

If you are not currently self employed, but are considering starting your own company in the future, you may want to register yourself as a sole proprietor now in order to build up your time as a self-employed businesswoman. This will move you towards that magic 2 year mark of self-employment faster. Registering yourself as the sole proprietor of your company can be done at a local license and registry bureau for a nominal fee.

If you have been self employed for as little as one day, you are still able to get a mortgage under a ‘stated’ income program, but a minimum down payment of 15% of the purchase price is required.

As with all financing, having a good credit rating will open more doors for you but if you have had some credit troubles in the past, hope is not lost (you can obtain your current credit report at www.equifax.ca).

Every mortgage situation is unique. Consult with a mortgage specialist who can personally navigate your credit report and help determine which type of mortgage financing program is best suited for your particular needs.

For further information regarding your personal mortgage needs, please contact Triston Rans, The Mortgage Group, at 403-571-8142 ext. 237 or email tristonrans@mortgagegroup.ca.

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