If you’re self-employed, you may have a more difficult time obtaining financing for that home, but there’s still many ways to get it. Since 2010, CMHC has changed the rules for down payment amounts, and to add to the confusion, there are also new rules for those who have been self-employed for more than three years. Still, 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.
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.
While mortgage financing is viewed on a case-by-case basis, if you work with a licensed mortgage professional 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.
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 professionals often 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’re self-employed and your credit isn’t so good right now, you can take steps to improve it greatly, here’s a blog I wrote about improving your credit score.
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 as well.
