While getting a self-employed mortgage in Canada can prove more difficult, it is still possible, providing you are looking in the right places. Depending on your situation, a mortgage from the bank may not be a viable option.

In this article, we are going to look at 4 different ways you can obtain a mortgage when self-employed. You will learn about getting a mortgage using your income, SISA loans, alternative lenders, and through Credit Unions.

1. Qualify for a Mortgage With Actual Income

While it’s more difficult to secure a mortgage with your income, it’s still possible for the self-employed. However, it’s going to require some additional steps.

One of these is having a great credit score. Without one, you’re going to struggle to take out a mortgage, regardless of your income.

When using your actual income for a mortgage, lenders will also look at how much you earn annually. Being self-employed, your income is going to change every year, so the credit lender will take this into consideration.

Keep in mind that your gross income doesn’t come into the equation , s o If you grossed $50,000 last year, but only paid yourself $15,000, the credit broker only takes into account the $15,000.

2. Qualify for a Mortgage With Stated Income

One of the best ways to get a mortgage when self-employed is by applying for a SISA loan.

SISA stands for a stated income-stated asset mortgage. Applying for this type of mortgage means the lender doesn’t need to verify your income. 

While your income isn’t verified, your credit score, repayment history, and employment are still taken into consideration.

This works great for people who are self-employed or have income that varies from month to month. Because the lender doesn’t need to verify your income, there is less documentation involved, so it won’t take as long for the application to go through.

What’s more, getting a SISA loan gives you more control. The lender typically gives you a payment schedule, and if you can manage the monthly payments, and earn enough, they will approve the mortgage.

3. Financing With Alternative Lenders

The best thing about getting a mortgage with alternative lenders is they are catered towards people with bad credit. So, if you’re self-employed and have a below-average credit score, an alternative lender is worth considering.

Using an alternative lender, you prove your income in other ways such as bank statements, contracts, and client invoices.

However, there is a slight downside.

Because they are aimed at people with bad credit, the lenders will not typically commit to any long-term contracts. Most alternative lenders offer short-term mortgages, hoping you’ll be in a better position to switch over to traditional lending in the future.

You can expect the average mortgage to be from 1-3 years.

4. Financing With Credit Union

Similar to SISA loans, Credit Unions tend to be more lenient than banks, making them great for the self-employed. They are not as lenient as SISA loans and sit somewhere in the middle.

When financing a mortgage with a Credit Union, you need to show a minimum of two years’ tax returns and 3 months of business statements.

Credit Unions will lend on properties worth over $1M, but they tend to charge higher interest fees. For this reason, they are considered riskier, especially for self-employed people whose income changes each month.

If you choose to get financing through a Credit Union, you can use a mortgage calculator to see how much you could save with prepayments.

Get in Touch With us

With something as important as getting a mortgage, it’s essential to speak to a professional mortgage broker  . Home equity loans are one option available and if you would like to discuss your situation with us to see if we can help, get in contact with our team of specialists today, or call us on (647) 895-3921.