Self-employed

Self-employed?Self-employed people represent an ever-growing proportion of the Canadian workforce. To help accommodate for this shift in population, mortgage lenders and insurers have products available in order to respond to this reality by making it easier for more self-employed borrowers to obtain mortgage loan insurance. These programs not only allow for lower required down payments, but also allow self-employed borrowers to benefit from competitive interest rates.

For those self-employed borrowers who can provide traditional documentation to confirm their income, as little as 5% can be put towards the down payment.

For those self-employed borrows who cannot provide traditional third party validation of income, the insurers offer mortgage loan insurance options to help realize their dream of home ownership with a minimum of 10% down payment, and 5% of that is required from their own resources (not borrowed).

It is important to note that these programs are designed for self-employed borrowers who have a proven 2-year history of managing their credit and finances responsibly. Eligible borrowers typically own a small size business for a minimum of two years, which can be confirmed via a third-party arm’s length document. In addition, the borrower is required to declare their annual income, which should be reasonable based on the industry, length of operation and type of business.

The income is determined by averaging the income of the previous two year period or using most recent year if income has increased year over year for 4+ years. Confirmed NOA (Notice of Assessment) income can be grossed up 15%.

Borrowers who have eligible deductions in excess of 15% of the income on their NOA may opt to provide audited or accountant prepared financial statements to support a higher income level, in lieu of the standard 15% gross up

If a borrower has been working for an extended period of time and recently became self-employed in the same field, the two-year self-employment requirement does not apply.

Minimum time of business operation can be documented through income tax returns supported by the borrower’s NOA, business credit reports, GST returns, active business bank accounts, audited or accountant prepared financial statements.

Most “No Income Verification Mortgages” require that you don’t own any income taxes on your NOA or require that you sign an affidavit to confirm that there are no income tax arrears.

Genworth and Canada Guaranty Premiums

Loan-to-Value

Premium on Total Loan

Up to and including 75%

1.15%

Up to and including 80%

1.90%

Up to and including 85%

3.35%

Up to and including 90%

5.45%

Up to and including 95%

N/A

 
If you are self-employed contact me, we have products available specifically for YOU!