It can no doubt be a little more challenging for self-employed individuals to qualify for a mortgage due to the amount of income they are able to verify. There are mortgage lenders in Canada that understand that self-employed individuals have tax write-offs creating significant reductions in their declared income.

With these mortgage lenders, you will not be required to prove your income and a reasonable estimate of your annual income will be acceptable. This is what is known as a stated income mortgage and you can purchase a home on stated income with as little as 10% down payment and receive the same low mortgage rate as an income qualified borrower.

A Notice Of Assessment (NOA) may be required only to show that there are no income taxes owing. The income on the NOA will not have any effect on the applicant’s mortgage approval.

Stated income mortgage loans will carry a higher CMHC fee than a mortgage loan with documented income. For example, the standard CMHC premium for a mortgage loan to 95% of the properties value and a 25 year amortization would be 2.75%. The premium on the same stated income mortgage loan would be 6%. The CMHC premium can be built right into the mortgage. What is CMHC?

For situations where your credit may be less than perfect, a stated income home equity loan may be an option. With a stated income home equity loan, there is lower risk on the part of the mortgage lender due to the added equity in the home. The mortgage rate you pay may be a little higher on this type of mortgage loan then with a traditional stated income mortgage.