It’s a common misconception we hear about a lot in the mortgage industry—you can’t get a mortgage if you’re self-employed. This is false.
While entrepreneurs and business owners may have a couple extra steps to take during the mortgage approval process, the payoff is big when you can finally say, “I’m a homeowner!”
The rules for self-employed mortgages have changed over the last five years, but if you can prove your income, show you’re up-to-date on your taxes and you have solid credit, the chances that you get that approval, are greatly improved.
“It’s not any more difficult to get a mortgage when you’re self-employed. The basic rules still apply for getting a mortgage. But if you don’t declare your freelance income, then you may have a problem.” [Genworth Canada]
By providing the required documentation, you’re much more likely to be approved for a mortgage if you qualify based on your income. The trouble is that if you cannot prove your income, you pose a higher risk in the eyes of lenders. Many business owners feel this pressure due to the number of tax write-offs they have; be sure your taxable income shows a reasonable amount for a lender to want to finance you.
Self-employed workers who are looking to get approved for a mortgage should always keep their personal tax returns up-to-date and filed on time. [Genworth Canada]
While mortgage financing is viewed on a case-by-case basis, if you work with a mortgage broker to obtain a pre-approval, you can be confident you have access to mortgage financing and you will know how much you can spend before you head out shopping for a property. Plus, brokers have access to multiple lenders who may have products available specifically for self-employed people.
If you do not qualify for traditional financing all is not lost, since you may be eligible for lending through an alternative or private lender. Mortgage brokers have access to private investors who are willing to lend money to self-employed individuals looking to obtain mortgages. Although you will pay a higher interest rate, this route may enable you to acquire funds to purchase a home. While there could be some added fees associated with going about a mortgage this way, it may be worth it for you in the long-run.
If you are self-employed and have questions about obtaining a mortgage, please feel free to contact me. Or alternatively, you can reach me on Twitter.
