For mortgage lenders, self-employed individuals fall under a special category. Unlike salaried employees, the income for self-employed people fluctuate depending on the stability of their business. Secondly, self-employed individuals have the ability to write-off more expenses than salaried employees. These write-offs may not truly reflect their earning ability. Mortgage brokers in BC have a solution for you.

There are many types of people who receive income that is completely or partially un-documented, such as:

• Small business owners - store keepers, restaurant owners, builders, taxi cab drivers etc.
• Sales people who receive income on commission
• Trades people - plumbers, electricians, carpenters, painters
• Individuals employed in the hospitality sector - waiters, waitresses, hotel employees, etc.
• Professionals - actors and actresses, freelance writers, athletes, counselors, etc. 
• Contract employees - software developers, business consultants, etc.

Recognizing the growing number of self-employed individuals in Canada, many institutions have designed programs to tap this market by offering what they call No Income Qualifier (NIQ) programs. These mortgages do not require verification of income. All the borrower needs to do is to provide a copy of their Notice of Assessment to prove that they do not owe the government back taxes. 

In the past, most NIQ programs required a down payment of between 25% to 35%. It is now possible, with mortgage insurance from Genworth  (formerly GE Mortgage) and AIG, to borrow through mortgage brokers (BC) with a down payment as low as 5%.  Genworth / AIG is looking for businesspeople who have good credit (minimum credit score of 700) and been in the business for at least 3 years. 

If the borrower has less than perfect credit, there are specialty lenders that will consider self-employed individuals on a high-ratio basis.  These mortgage are available only through mortgage brokers in BC.

Of course, if the businessperson can provide full documentation, he/she can qualify under traditional lending programs. These mortgages can be either conventional or high ratio. For a conventional mortgage (i.e., mortgages where the borrower has at least 20% down payment), the rules for qualification will vary from lender to lender. On high ratio mortgages, the lender will have to comply with the Canadian Mortgage and Housing Corporations (CMHC) , Genworth, AIG rules.  Discuss your mortgage issues with your mortgage broker BC so that you know much you qualify for.  

On these traditional programs, borrowers should be prepared to provide the complete T-1 General (3 years), full "Statement of Business Activities" (3 years), Notice of Assessment (3 years) and current year-to-date information. The lender, at their discretion, may allow add backs for depreciation, salary paid to owner/spouse, rent paid to owner (such as in a home office). Most lenders will be looking to establish the average income for the past 3 years in determining the amount the borrower is qualified to borrow.  Your mortgage broker (BC) will be able to provide you with a complete requirements for a fully qualified mortgage.

No Income Qualification (NIQ) programs

Given the variety of programs available, it is best to consult with me as to which one is best for you.

Note: Lender policies can change without notice.

Undocumented income

Wells Fargo has an "alternative documentation (Alt Doc)" program which allows individuals such as the self-employed or those with undocumented income (e.g., tips) to use that income to qualify for a mortgage.  Up to 90% financing is available.  The borrower's credit score cannot be lower than  600 to qualify.

Wells Fargo will attempt to verify your income in other ways.  They may require your bank statements for the past 12 months. Or, if you earn tips, they will talk to your employer to verify reasonableness of your claimed income.  Wells Fargo products available through mortgage brokers in BC.

Are you having cash flow problems? or, are you paying too much interest on your credit cards?

Why not consider refinancing your home?  Home Trust will provide a 2nd mortgage up to 80% of the value of your home.  You don't even have to prove your income.  Consolidating your debts could reduce your monthly payments and provide you with the needed cash for your operations.

Another option is an equity line of credit.  There are lenders that will provide a line of credit up to 85% of the value of your home without income verification.

If you are self-employed, have at least 20% equity in your home, and are in a higher tax bracket, you need to consider making your home mortgage tax deductible. There is no added risk to doing this.  All you need to do is to learn how to restructure your cash flow so that you make your home mortgage tax deductible.   Be sure to come in for a consultation to discuss how this simple strategy can work for you.

"My job is done when you know your options"