Self-Employed Mortgage in Ottawa: How to Qualify
Business owners, contractors and commission earners are common in Ottawa, and many find that the income they report for tax purposes is lower than what they actually earn. That can make qualifying harder. This guide explains what lenders look for and the routes available.
How lenders assess self-employed income
- Two-year average: Lenders often average your net income from the last two Notices of Assessment.
- Line 15000 income: Your total income on your tax return is the number most lenders start with.
- Business-for-self vs incorporated: Sole proprietors and incorporated owners are assessed differently, including how salary and dividends are counted.
- Add-backs: Some lenders add back certain expenses, such as depreciation, when they calculate income.
- Stability: Consistent or growing income is viewed more favourably than volatile income.
Documents you may need
- Two years of Notices of Assessment and T1 Generals
- Business registration or articles of incorporation
- Financial statements or an accountant’s letter if incorporated
- Recent bank statements showing your down payment
- Proof that you have no CRA tax arrears
Lender types for self-employed borrowers
| Lender type | Typical fit |
|---|---|
| Major banks | Strong tax-return income, two years in business, good credit |
| Credit unions and monoline lenders | More flexible income calculations for some files |
| Alternative (B) lenders | Lower reported income, shorter history or credit challenges. Higher rates and fees are common. |
How to improve your chances
- File your taxes on time and pay any balance owing.
- Keep business and personal finances separate.
- Avoid large one-time deductions before applying, where possible.
- Have your accountant provide a clear income summary.
- Talk to a broker who works with self-employed borrowers before applying at a bank.
Frequently asked questions
How long do I need to be self-employed to get a mortgage?
Most lenders prefer two years. Some lenders will consider one year if you worked in the same field before becoming self-employed.
Do I need a bigger down payment if I am self-employed?
Not always. If you can prove your income like other borrowers, the minimum down payment is the same. Alternative lenders may require 20% or more.
Can I qualify with low reported income?
Some alternative lenders offer options for borrowers who reduce taxable income through deductions. These usually cost more, so compare carefully.
Will I pay a higher rate as a self-employed borrower?
If you qualify with a major lender, your rate can be the same as anyone else’s. Alternative lenders charge more to cover added risk.
Should I incorporate before applying?
Talk to your accountant and a broker first. Changing your structure right before applying can complicate how lenders count your income.
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