Obtaining a mortgage as a self-employed individual in Ontario may require a slightly different approach compared to traditional employment. Here are some key points to consider when applying for a self-employed mortgage in Ontario:
Income Documentation: As a self-employed borrower, you will typically need to provide additional documentation to verify your income and financial stability. This may include at least two years of personal and/or business tax returns, financial statements, business registration documents, and bank statements.
Stated Income vs. Full Documentation: Depending on your situation, you may have the option of a stated income mortgage or a full documentation mortgage. Stated income mortgages allow you to state your income without providing extensive documentation, but they often come with higher interest rates and stricter qualification criteria. Full documentation mortgages require thorough income verification and documentation.
Business Stability: Lenders will assess the stability of your self-employed business. They may consider factors such as the length of time your business has been operating, its financial health, and consistency of income. Demonstrating a stable and profitable business will enhance your chances of mortgage
Creditworthiness: Your credit history and score will be important factors in the mortgage application process. Ensure that you maintain good credit and address any issues or discrepancies on your credit report.
Down Payment: The down payment requirements for self-employed individuals are typically the same as for traditionally employed individuals. The minimum down payment in Canada is 5% for homes priced up to $500,000, and 10% for any amount above that. However, having a larger down payment can improve your mortgage options and potentially help offset any perceived risk associated with self-employment.