Are you a self-employed home buyer? Here are five things you need to prepare
If you are a self-employed home buyer, you might be wondering how the nature of your income could potentially impact your mortgage application.
The truth is that being self-employed isn’t a barrier to getting a mortgage, but the process may be more challenging compared to someone that earns a traditional salary. Lenders will likely need more documentation to fully understand your unique financial story, which will allow them to offer the best financing solution for your situation.
In this light, it helps to have certain documents on hand if you’re self-employed looking to obtain a mortgage. Below, we look at five things to prepare when you’re ready to make that jump into homeownership as a self-employed home buyer.
1. Records of your income sources
Having a stable source of income shows that you can make the payments required to service a mortgage, so make sure your income sources are well-documented and can be easily verified by lenders. This includes contracts and agreements, as well as financial statements.
2. Bank statements
Lenders look through bank statements to verify that your income flow can service a mortgage and to make sure that you have the necessary funds to pay for the down payment and closing costs. From your bank statement, they can also see if you have any existing loan balances that need to be paid off.
3. Documents showing the source of your down payment
When applying for a mortgage, lenders will typically ask for documents that verify the source of your down payment. This is to ensure that borrowed money is not being used for the down payment.
Whether your down payment comes from the sale of your current home, your savings or is a gift from family members, you can read this blog for more details.
4. Business or professional licenses
If you are a business owner, lenders might ask that you provide them with your business license and permits. You should also be ready to provide your professional license if you work in a regulated field.
5. Tax documents
Some documents that lenders might ask for include notices of assessment, T1 general tax forms, T4 or T4A tax forms and forms related to your GST/HST obligations.
How mortgage brokers can help self-employed home buyers
One professional who can help you navigate these different requirements for self-employed home buyers is a mortgage broker. Mortgage brokers help connect borrowers with lenders, so they will know the ins and outs of the mortgage application process and can give you a clear understanding of what you need as a self-employed home buyer.
This blog explains the different ways you benefit from working with a mortgage broker.
And when you’re ready to buy your home, Home Trust has a range of financing options available. Learn more by visiting hometrust.ca/mortgages.
The information, materials and opinions contained in this Blog are provided for our information only. This Blog does not constitute legal, financial or other professional advice and you should not rely on it as an alternative to specific advice based on your particular circumstance. This Blog contains links to third party websites. These links are provided for information and convenience; Home Trust does not endorse the content of any third party website, and it makes no representation or warranty as to the information on such third party sites. By clicking on any link to a third party site, you leave Home Trust’s website and do so at your own risk. Home Trust disclaims all liability for any damage or loss that results from your access to or reliance on information contained in this Blog or any third party site.
Share Article