If you are self-employed in Canada, you may feel that getting approved for a mortgage is a daunting task. However, with the right preparation and documentation, it is possible to qualify for a mortgage as a self-employed individual. In this blog, we will discuss the steps you can take to improve your chances of getting approved for a mortgage.

Get your financials in order

As a self-employed individual, you will need to provide proof of income to lenders. This can be challenging if you do not have a steady income stream or if your income fluctuates. To address this, you should ensure that your financials are in order. This includes:

• Keeping accurate records of your income and expenses.
• Filing your taxes on time and having up-to-date tax returns.
• Keeping your personal and business finances separate.
• Having a good credit score.

Provide a larger down payment

Providing a larger down payment can help to offset any concerns that lenders may have about your income stability. A larger down payment also reduces the amount of money you need to borrow, which may increase your chances of being approved for a mortgage. The minimum down payment required in Canada is 5% for homes under $500,000 and 10% for homes between $500,000 and $1 million.

Get pre-approved for a mortgage

Getting pre-approved for a mortgage is a good way to know how much you can afford and to demonstrate to lenders that you are serious about buying a home. It also gives you an advantage when negotiating with sellers.

Provide additional documentation

When applying for a mortgage as a self-employed individual, you will likely need to provide additional documentation. This may include:

• Your business license or registration.
• Proof of income, such as tax returns, financial statements, and contracts.
• Proof of employment, such as client contracts or invoices.
• Bank statements showing your business income and expenses.
• A letter from your accountant or financial advisor confirming your income.

Consider alternative lenders

If you are having difficulty getting approved for a mortgage from a traditional lender, consider alternative lenders. These lenders specialize in working with self-employed individuals and may be more willing to consider your unique circumstances.

In conclusion, getting approved for a mortgage as a self-employed individual in Canada requires preparation and documentation. By getting your financials in order, providing a larger down payment, getting pre-approved, providing additional documentation, and considering alternative lenders, you can increase your chances of getting approved for a mortgage and achieving your dream of homeownership.

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Written By Jay Vyas, Mortgage Agent at Dominion Lending Centres Better Rate Mortgage