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 writes off lots of business expenses to reduce your personal taxable income.  Fortunately there are custom fit home buyer loans for those unique circumstances of small business owners.

How To Get Approved For Self Employed With Low Documents

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 or investment property.  In some cases, the lender may require up to 35% down for rural properties on well and septic systems.  Alternative lending is available for refinances, as well.

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, a 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 could impact how much money the lender will give you.

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:

• Let’s say that you need $100,000 of self employment income to qualify for your mortgage;
• Lenders may ask you for 6-12 months bank statements showing enough deposits along with customer invoices or accountants’ letter.

The interest rates on mortgages for self employed low documentation of income are a bit higher than bank rates, there are also lender fees generally of 1% of the mortgage amount and brokerage fees of 1% of the mortgage amount, these can be paid with proceeds during refinances; with purchases these will be in addition to your down payment.  You will also need a minimum 20% down payment 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, some exceptions can be made.

In a nutshell, alternative lenders may give you a mortgage for 65% – 80% of purchase price or appraised value, depending on your situation and the strength of your application and property.  They can also increase a self employed applicants’s affordability by 50% + allowing more assets or someone’s dream home to be reality.

As a mortgage broker, it is my responsibility to ensure your goals and welfare are met in the market, and we have the tools to get you there!

Contact me today for more information!