Two Main Qualification Paths
Self-employed borrowers generally qualify either through traditional documented income, using tax returns and notices of assessment, or through stated income programs that estimate income based on the nature of your business and industry averages. Each path has different lenders and requirements.
The Write-Off Trade-Off
Claiming a lot of business expenses lowers your taxable income and your tax bill, but it also lowers the income a lender can use to qualify you. Some self-employed buyers work with their accountant a year or two before buying to balance these goals.
Documents Lenders Ask For
Expect to provide two years of personal tax returns, notices of assessment, and often financial statements or proof of business registration. Lenders want to see consistent or growing income over that period.
- Two years of tax returns
- Notices of assessment
- Business registration or articles of incorporation
Stated Income Programs
For borrowers whose tax returns understate their real cash flow, some lenders offer stated income mortgages that estimate income based on reasonableness for your profession, often requiring a larger down payment in exchange.
Why a Broker Helps Here
Because self-employed income rules vary so much between lenders, working with a broker who understands these programs can make the difference between an approval and a decline.
Frequently asked questions
- Do self-employed buyers need a bigger down payment?
- Not always, but stated income programs often require a larger down payment than standard documented income mortgages.
- How many years of self-employment do I need?
- Most lenders want to see at least two years of self-employment income history.
- Can I still qualify if I write off a lot of business expenses?
- Yes, but your qualifying income may be lower, so it helps to plan with your accountant before applying.