I'm Theeban Pathmanathan, Mortgage Agent Level 2 with FIN Mortgage – Dominion Lending Centres, and self-employed and business-owner mortgages are my specialty. I match your file to the lender whose rules fit how you actually earn.
Who a self-employed mortgage is for
- Sole proprietors and incorporated business owners, whether you pay yourself through salary, dividends or both
- Contractors and trades paid by the job
- Commissioned salespeople and real estate agents
- Truck drivers and owner-operators
- Consultants, freelancers and gig workers
- Professionals such as dentists, lawyers and accountants who own their practice
- Newer businesses with less than two years of history
How self-employed mortgages work
Lenders call this "business-for-self" or BFS lending. Employed borrowers prove income with a pay stub; you usually prove it with tax returns, and lenders often average the last two years. Good tax planning that lowers your taxable income can also lower the income a lender will use. The goal is to show a reliable, reasonable income, even if your net taxable income is lower because of legitimate write-offs. Lenders don't all treat self-employed income the same way, and depending on your situation, there are three main paths.
1. Traditional (A) lenders
Banks, credit unions and monoline lenders typically look at your last two years of tax returns. Some may add back certain items, like depreciation, or use income retained in your corporation. If your declared income supports the mortgage, this usually gives you the best rates. Insured options may also be available for qualified self-employed buyers with less than 20% down.
2. Stated income with alternative (B) lenders
If you write off a lot, a stated-income or BFS program from an alternative lender can consider a reasonable income for your industry, supported by business bank statements and your history. These programs usually require a larger down payment or more equity and come with higher rates, but they can be a smart bridge while your declared income grows.
3. Private lending
When timing is tight, credit is bruised or the property is unusual, a private mortgage can focus mainly on equity. It's typically short-term, and we'd plan a clear exit strategy from day one.
The stress test still applies
With A and most B lenders, you'll qualify at the greater of your contract rate plus 2% or 5.25%. Banks and other federally regulated lenders also follow OSFI's B-20 guideline, which is why documenting your income properly matters. Run scenarios with the affordability calculator before we talk.
Documents you'll need
- Photo ID
- Two years of T1 Generals and Notices of Assessment
- Proof that personal taxes are paid up to date (no balance owing to CRA, or a payment arrangement)
- Business registration or articles of incorporation
- Two years of financial statements (if incorporated)
- Six to 12 months of business bank statements (for stated-income programs)
- Proof of down payment or current mortgage statement
Not sure what you have? That's fine. We'll sort through it together.
Ways to strengthen your application
- File on time and pay your taxes. Money owing to the Canada Revenue Agency can hold up an approval.
- Keep business and personal money separate. Clean business bank statements make your income much easier to verify.
- Watch your personal credit. Pay cards and lines of credit on time and keep balances well below their limits.
- Plan your down payment early. Funds that have been in your account for at least 90 days are easier to document.
The process with Theeban
- Free consultation. We talk about your business, how you're paid and how you file taxes.
- Income review. I look at your returns and statements the way an underwriter will, and tell you honestly where you stand.
- Shop 50+ lenders. I compare A, B and private options and explain the trade-offs between rate, down payment and flexibility.
- Package your file. A well-presented BFS file makes a real difference, so I explain your business clearly to the lender, such as a recent rise in income or a one-time expense.
- Close with confidence, with a plan to move you to better terms as your income history grows.
Common self-employed scenarios
- Lots of write-offs, low taxable income: stated-income options or add-backs can help.
- Recently incorporated: you moved from sole proprietor to a corporation and your income looks different on paper.
- Less than two years in business, with prior experience in the same industry.
- Taxes owing to CRA that need to be addressed before approval.
- Buying a home: see home purchase mortgages and pre-approval.
- Refinancing to consolidate business or personal debt with a refinance and equity take-out.
- Renewing with a B lender and ready to move back to prime at renewal.
A local Toronto and Durham angle
Toronto, Scarborough, Markham and Durham Region are home to a huge number of small businesses, from trades and trucking companies to restaurants, clinics and online businesses. Many owners I work with live in Pickering, Ajax, Whitby or Oshawa and run their businesses across the GTA. My office at 1585 Markham Rd in Scarborough is easy to reach, and I'm available evenings and weekends because I know business owners don't keep nine-to-five hours.
Planning ahead makes a difference
You don't need a T4 to get a good mortgage. You need someone who understands how lenders look at self-employed income and which ones will say yes. If you're thinking about buying or refinancing in the next year or two, talk to me before you file your taxes. How much you write off, and whether you pay yourself through salary or dividends, can change how lenders see your income. I'm not an accountant and won't give tax advice, but I'm happy to work alongside yours so your tax plan and your mortgage plan support each other.
Frequently asked questions
Can I get a mortgage if I'm self-employed?
Yes. Options include traditional lenders using two years of tax returns, stated-income programs with B lenders, and private lending.
What is a stated income mortgage?
A program, usually from an alternative lender, that considers a reasonable income for your business, supported by bank statements, rather than only your taxable income.
How much down payment do I need if I'm self-employed?
With an A lender and strong declared income, it can be the same as any buyer. Stated-income programs usually need more down.
Do I need two years in business?
Most A lenders prefer two years. Some lenders will consider less, especially if you have experience in the same industry.
Will owing taxes to CRA affect my mortgage?
Usually, yes. Most lenders want personal taxes paid or a payment plan in place. We can plan around it.
Are rates higher for self-employed borrowers?
Not with A lenders if your income qualifies. B and private options cost more, which is why we plan a path back to prime.
Can I qualify with an incorporated business?
Yes. Lenders will usually ask for your personal returns and Notices of Assessment, plus your company's financial statements, and may consider income retained in the corporation in some cases.
This page is general information only and is not financial, legal or tax advice. All mortgages are subject to lender approval and qualification (O.A.C.). Rates, terms, programs and government rules change from time to time, so please speak with me about your own situation. Calculator results are estimates only and do not constitute a mortgage approval or offer. Theeban Pathmanathan, Mortgage Agent Level 2 (licence M14000189), FIN Mortgage – Dominion Lending Centres, brokerage licence #12825, independently owned and operated. Licensed by the Financial Services Regulatory Authority of Ontario (FSRA).