Mortgage Blog

Great Mortgage News for Self Employed Business Owners!

September 17, 2018 | Posted by: Brandi Pierik and Matthew Pierik - Red Deer and Calgary Mortgage Brokers

CMHC has Changed its Guidelines for Mortgages for Self Employed Business Owners

Great News if You’re Self Employed!

Canada Mortgage and Housing Corporation (CMHC) is making it easier for self-employed Canadians to qualify for a mortgage – as of October 1st, 2018 – by providing lenders with more guidance and flexibility than ever before.

Self-employed Canadians are key contributors to strong and vibrant communities, and makeup about 15% of Canada’s population, says CMHC, adding that this sector often has difficulty qualifying for a mortgage as their incomes can vary or are less predictable.

This is welcome news for Albertans, as a recent CBC article reports people working for themselves accounts for a whopping 86% of the province’s net job growth over the past 1.5 years!

Whether out of a sense of opportunity or necessity (or a little bit of both), these people have chosen to stop seeking a steady paycheque and set out to be their own boss.

Roughly 410,000 Albertans are now self-employed. That’s an increase of 43,000 from just 1.5 years ago. The number of people working as employees over the same time span, however, grew by just 7,000.

The changes include CMHC providing:
- Examples of factors that can be used to support the lender’s decision to lend to self-employed borrowers – who have been operating their business for less than 24 months, or were in the same line of work for less than 24 months – such as acquiring an established business, sufficient cash reserves, predictable earnings, and previous training and education
- A broader range of documentation options to increase flexibility for satisfying income and employment requirements when qualifying self-employed borrowers, such as a Notice of Assessment (NOA) accompanied by a T1 General, the CRA Proof of Income Statement, and the Statement of Business or Professional Activities (T2125) to support an “add-back” approach for grossing up income for sole proprietorship and partnerships

Traditionally, stated-income mortgage products have been available to self-employed borrowers who are unable to provide readily accepted income verification but have a proven two-year history of responsibly managing credit and finances.

This added flexibility for proving income and employment, and helping those who have been self-employed for a shorter period of time will better streamline the mortgage process for business owners.

Have questions about your self-employed mortgage options, or your Red Deer mortgage in general? Whether you are a first-time homebuyer or moving up Answers are just a call or email away! Your Red Deer Mortgage Broker for the best Red Deer Mortgage Rates is Brandi Pierik, Dominion Lending Centres!

Back to Main Blog Page