How to get a mortgage for self employed with low documents if you’re a small business owner?
We know that as small business owners you have the ability to reduce reported income by expensing items related to your business operations. But, by reducing the income to save on taxes you reduce the amount of reported income needed to qualify for mortgage.
Mortgages for self employed are for you if your business has a cash component or you write off lots of business expenses to reduce your taxable income. Fortunately there are custom fit home buyer loans for those unique circumstances of small business owners.
Let’s take a close look at what’s available for small business owners who cannot prove all income on CRA tax returns.
Depending on the quality of your application and property, credit, area and size of municipality, alternative mortgage financing is available at 20% down to buy an owner occupied home. 35% down for rural properties on well and septic systems.
This mortgage is for you even if you’re still in the first year of starting your business – past 6 months. You’ll need proof of self employment, either business registration or Articles of Incorporation. Plus, few months of business bank account history along with several invoices to be used to support your income needed to qualify.
Good or low credit, we have lenders that understand your situation and offer mortgages for self employed to buy a home or a rental property — or, to refinance home equity mortgage.
In these situations, the quality of your credit will determine your interest rate and how much money the lender will give you.
The lenders for business owner no income mortgage focus on the quality of the property, location and marketability.
Each situation is unique but let’s take a look at the loans for self employed with no proof of income that the broker channel lenders have to offer.
In Ontario “low document proof of income” alternative mortgage lenders for self employed loans do not solely rely on traditional proof of income such as tax returns. They will require your business registration, bank statements showing deposits to justify the amount of stated income needed to qualify for a mortgage plus invoices and other requirements depending on your circumstances.
Here is an example how these self employed home loans might work:
The interest rates on mortgages for self employed no proof of income are a bit higher than bank rates, there are also lender fees about 1% of mortgage amount and you will need a minimum 20% down payment o.a.c. to buy a house, depending on the area and your credit. The down payment can be partially gifted but you must have at least 5% of your own money.
In a nutshell, alternate lenders may give you a mortgage for 65% – 80% of purchase price depending on your situation and the strength of your application and property.
As mortgage brokers, we are paid for our service by banks for good credit and good income mortgages. This is not always the case with alternative “B” mortgage lenders and we pass our fees unto clients payable from advance of funds on closing.