The income problem
Most lenders use line 150 of your notices of assessment, averaged over two years. Aggressive write-offs shrink that number. The business may be thriving while the file looks thin, which is why the lender you choose matters more for a business owner than for almost anyone else.
Documents that make the difference
A well-built self-employed file answers questions before they are asked. Two years of full T1 returns with statements of business activities, notices of assessment with no balance owing, business registration or articles of incorporation, and business bank statements showing consistent deposits.
- Two years of T1 returns and notices of assessment
- Proof taxes are paid in full - arrears stop files cold
- Six to twelve months of business bank statements
Stated income and alternative lenders
When the tax returns understate reality, alternative lenders will consider bank statement deposits or a reasonable gross-up of declared income. Rates sit above bank pricing and there is usually a lender fee, but the deal closes. Many owners use an alternative lender for one term, then move to bank pricing once two clean years of returns exist.
Plan two years ahead if you can
If a purchase is coming, talk to a broker before the next tax filing. Declaring more income costs tax but can unlock far better mortgage pricing over a five-year term. That comparison is worth running with your accountant and your broker in the same conversation.
Frequently asked questions
- How long do I need to be self-employed to qualify?
- Most lenders want two years of history. Some will consider less with strong prior experience in the same field.
- Can I get a mortgage if I write off most of my income?
- Yes, usually through an alternative lender that looks at bank deposits rather than line 150. Pricing is higher but the deal gets done.
- Do unpaid taxes matter?
- Considerably. Outstanding CRA balances must normally be cleared or paid out through the mortgage before funding.