Self-Employed Mortgages in Alberta

How lenders look at self-employed income

Lenders mostly rely on your personal tax returns: the T1 General and the CRA Notice of Assessment, usually for the last two years. If you write off a lot of expenses, your taxable income can look lower than what you actually earn. Some lenders allow certain add-backs, such as part of business-use-of-home or capital cost allowance, and some offer programs that consider a broader picture of income, often with a larger down payment.

Lenders also commonly look at how long you've been self-employed, whether you're in the same line of work you were in before, and whether personal and business taxes are paid up to date. Taxes owing to CRA can delay or block an approval.

Documents to gather

• Two years of T1 Generals (with Statement of Business Activities, if applicable) and Notices of Assessment
• Proof that no taxes are owing (a CRA account summary)
• Incorporated: articles of incorporation and two years of corporate financial statements; T2s if requested
• Sole proprietor: business licence or registration, GST registration if you have one
• Business bank statements (some programs)

Planning ahead helps

If you're thinking about buying in the next year or two, talk to John and your accountant before you file. How much income you report, and how, affects what you'll qualify for. Paying down personal debt and keeping a clean credit history also help. Seasonal and contract income is common in Alberta, for example in the trades, energy and agriculture. Lenders often average variable income over two years.