1 Aug 2018



Good news for self-employed homebuyers

Over the last five years, Canada has seen a steady increase of people who quit their nine-to-five jobs to start their own businesses. Besides not being able to guarantee a steady paycheque, there are many perks to being self-employed: you choose your own hours, work from home or location of your choosing, decide what product or service you want to offer, follow your passion. The number of individuals choosing this profession is increasing, but particularly in the self-employed incorporated sector with no paid help, according to Statistics Canada. This division of individuals are trying to make it all on their own, however, they do not have a ‘steady income’ in the eyes of the bank. Therefore, this could make applying for a mortgage very difficult.


Luckily, our Canadian government sensed this shift in employment rates and realized that it was time to make a change. Self-employed individuals can still make enough money to easily afford mortgage payments, however, it may not appear so in the first year or two of the company. A Statistics Canada survey showed that average household incomes hardly differed in 2009, with both self-employed and paid employees averaging $85,000 annually. Sales can be slow and with a lot of overhead, start-ups often take time to bring in revenue. The Canada Mortgage and Housing Corporation (CMHC) decided to make it easier for those self-employed individuals to qualify for mortgages and here’s how.


In order to make this change viable, the CMHC is providing lenders with more guidance and detailed documentation in the home buying process. With extensive information and further education on self-employment, lenders will be more inclined to grant mortgages for entrepreneurs, startups and small business owners. The examples provided by the national housing corporation have factors that pertain specifically to self-employed individuals who have been operating their business or have been in the same line of work for less than 24 months. This specification allows more leniency for those starting out in this profession. These changes will take place on October 1, 2018.


It can be hard enough to live with an unsteady paycheque, so perhaps now self-employed people will feel slightly more relaxed when it comes to applying for a mortgage. The changes that will be made applicable to both transactional and portfolio insurance, making things easier all around. The CMHC adjusted their policies to aid self-employed individuals as best they could, by providing lenders with further information, examples and detailed documentation to simplify this action.


Therefore, perhaps your dream of simultaneously running your own business and owning your own home is closer than ever before. Come October 1, applying for a mortgage as a startup company, entrepreneur or self-employed individual will be that much more attainable. We can only hope for a smoother process and easier submissions when it comes to mortgage applications.



Tags : calgary home buying, calgary homebuying, calgary mortgage, calgary mortgage broker, calgary real estate, calgary realtor

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