Self-Employed and Mortgage-Ready? What Lenders Really Want to See from Your Income
- Edith Parinas
- Jul 9
- 2 min read
If you’re self-employed in Canada and dreaming of homeownership, you already know that getting a mortgage isn’t quite as simple as showing a pay stub. But don’t worry — mortgage approval is possible with the right strategy and preparation. The key? Understanding how lenders assess your income.
Here’s what you need to know to get mortgage-ready — and set yourself up for a smooth path to the keys.
🔍 What Counts as Income When You’re Self-Employed?
Lenders want reassurance that your income is consistent and enough to support your mortgage payments. Since self-employed income can vary year to year, they’ll dig a little deeper than they would for salaried applicants.
Here's what they'll typically ask for:
Two most recent years of Notices of Assessment (NOA)
Two years of T1 Generals (your full tax return)
Business financial statements (if applicable)
Proof of business ownership, such as a business license or articles of incorporation
This documentation helps them determine your average income over the past two years — and whether it meets their qualification thresholds.
🧾 Why Declared Income Matters More Than Gross Income
If you’re like many entrepreneurs, you maximize deductions to lower your tax bill (because who wants to give CRA more than they need to?). But here’s the catch: the income you report after deductions is what lenders use.
Translation?
The more you write off, the lower your qualifying income looks on paper — and the tougher it can be to get approved for the amount you want.
🔑 Tip: If you’re planning to buy within the next 1–2 years, speak with a mortgage professional before you file your taxes. Strategic planning now can set you up for stronger qualification later.
📉 What If Your Income Fluctuates?
Self-employment often comes with peaks and valleys — hello, seasonal work or creative contracts! Lenders account for this by averaging your income over the last two years.
For example:
Year 1: $85,000
Year 2: $60,000
Average used for qualification: $72,500
If your income has dropped recently, lenders may use the lower figure — another reason to plan ahead and keep your finances strong.
🛠️ How to Strengthen Your Application
If your declared income doesn’t quite meet lender criteria, here are some ways to make your application stronger:
✅ Keep business and personal finances separate
✅ Maintain excellent credit
✅ Save for a larger down payment
✅ Limit new debt before applying
✅ Work with a mortgage broker who understands self-employed files (Hi, that’s me!)
👩💻 Final Thoughts
Being your own boss shouldn’t hold you back from being a homeowner. With the right prep and expert guidance, self-employed Canadians can — and do — qualify for smart mortgage solutions every day.
Want to know where you stand and how to strengthen your chances?
📩 Let’s chat. Book your personalized Mortgage Readiness Call and get clarity on your next steps.
Ready to dive deeper?👉 Download the Mortgage Readiness Guide: 10 Steps to Get Into The House of Your Dreams — it’s free and full of insights made just for self-employed and entrepreneurial homebuyers.
– Edith Parinas
'The Mortgage Broker ~ The Yogi ~ The Blogger'
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