Get a mortgage without a salary

There are things that you can do to help you qualify for a mortgage.



From the Summer 2013 issue of the magazine.


Landing a mortgage is trickier for the self-employed than their salaried counterparts. Not only do self-employed people face higher interest rates and CMHC mortgage insurance premiums, they are also more likely to have their loan applications rejected outright. If you’re self-employed, you’re best off seeing a mortgage broker a few years prior to your purchase so you can make a plan.

It sounds counterintuitive, but you may want to keep tax deductions to a minimum for at least two years before applying for a mortgage. You’ll show more income on your tax return, which will make it easier to qualify. “It’s about foregoing some short-term tax savings in order to qualify for a future mortgage,” says Scott Plaskett, CEO at Ironshield Financial Planning. You want to show income stability, he says.

Keep in mind that the larger the down payment, the better your chances of getting a low-rate mortgage, as greater equity means less risk to your lender. While banks are fairly strict on their lending criteria, a mortgage broker can help you access other types of lenders that are more likely to approve your loan.

-Vanessa Santilli

4 comments on “Get a mortgage without a salary

  1. Hi, sorry, what's the good news exactly? I have been a self-employed business owner for over 25 years and have rode waves of recession, and prosperity, but always the bills were paid. Yet as I find myself at a fork in the road, I again have to jump through flaming hoops to demonstrate I am not a risk or likely to default on mortgage payments. An employee can go from salary to nothing in a day, but a self-employed individual has the wherewithal to scramble to make ends meet, if not even meet with great success. Some financial institution needs to reward the self-employed not penalize them for our entrepreneurial spirit.


    • It is getting trickier to qualify when you can't prove your income but there are a few things which will help:

      -Be sure to keep your Notices of Assessment from Canada Revenue Agency to confirm you have no tax liability.

      -Don't show a loss for the previous 2 years. You don't need to show a big positive income but a loss is a killer.

      -Do have a down payment available-at least 15%.

      -Have a good credit score-minimum 680. If you are not sure what yours is talk to an experienced mortgage broker who can tell you your score and how to raise it if you need to.

      -Be able to prove what your gross sales are. Many lenders will base their decision on gross sales if you are going through their self-employed program.

      -Do deal with someone who specializes in self-employed financing. Most bankers do not know the details of the programs they have or consider them too complicated to get involved with.


  2. I am self employed yet I just got a convential low rate mortgage at BMO (at a preferred rate). The key is a good down payment AND if at all possible T-4 yourself for a year or two. Less tax advantageous but irrefutable since your notice of assessment classifies it as Employment Income (as opposed to business income). This is one distinct advantage to incorporation. The business declares the expenses but you get the confirmation of income.
    I agree though that a financial institution that is focussed on the huge number of us that are self-employed would definitely be welcome. Then again, so would an author/publisher who focussed on writing books for the self-employed!


  3. i would've liked more information on the subject


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