Self-Employed? Here’s How You Can Buy Your First Home

For many self-employed Canadians, buying a home is a dream that sometimes feels just out of reach. Unlike salaried employees, who can show a simple pay stub and T4 to prove income, entrepreneurs, freelancers, and business owners need to take a few extra steps to qualify for a mortgage.

But here’s the good news: with the right preparation, self-employed buyers can absolutely get into the market and purchase their first home. It’s all about knowing what lenders look for—and planning ahead.

The Challenges Self-Employed Buyers Face

Lenders want to be confident you can make your mortgage payments. For salaried employees, this is straightforward: their income is steady and easy to verify. For self-employed individuals, income can fluctuate and often looks lower on paper due to business write-offs.

The most common hurdles include:

• Showing consistent income over time
• Higher scrutiny of tax returns and deductions
• Potentially higher down payment requirements
• Extra documentation compared to traditional borrowers

Steps to Set Yourself Up for Success

1. Get Your Finances Organized Early

Start preparing at least 2 years in advance of buying a home. Lenders typically want to see at least two years of personal tax returns and Notices of Assessment (NOAs). These documents are key in proving stable income.

2. Minimize Excessive Write-Offs

While it’s tempting to write off as much as possible to reduce taxes, keep in mind: your mortgage approval is based on your declared income, not your gross earnings. Striking the right balance between tax savings and mortgage qualification is crucial.

3. Build Strong Credit

Your credit score is one of the biggest factors in mortgage approval. Aim for a score of 680+ by:

• Paying bills on time
• Keeping credit card balances low
• Avoiding frequent new credit applications

4. Save for a Larger Down Payment

Some lenders may require self-employed buyers to put down more than the minimum 5%. Aiming for 20% down not only strengthens your application but can also eliminate the cost of CMHC insurance.

5. Reduce Debt

High credit card balances, car loans, or lines of credit can all affect how much mortgage you qualify for. Start paying these down before applying.

6. Work with the Right Mortgage Broker

Not all lenders treat self-employed buyers the same. Some have flexible programs designed specifically for entrepreneurs, while others are stricter. An experienced mortgage broker can connect you with lenders who understand self-employed income.

7. Prepare Extra Documentation

Be ready to provide:

• 2 years of tax returns and NOAs
• Business financial statements
• Proof of business registration or incorporation
• Bank statements showing consistent deposits

Being self-employed shouldn’t hold you back from becoming a homeowner. With the right planning, organizing your finances, balancing write-offs, saving for a solid down payment, and working with the right professionals, you can put yourself in a strong position to buy your first home.

The process may require extra steps, but many entrepreneurs find the effort worthwhile: not only do they secure a home, but they also build long-term stability and equity.

We’ve helped many self-employed individuals purchase their first home, if you are looking for a supportive team to get you there, reach out to us today!