Getting approved for a mortgage as a self-employed individual in British Columbia isn’t impossible—but it does require a different level of preparation, transparency, and documentation than a salaried applicant might face. Whether you’re a contractor, freelancer, small business owner, or part of the gig economy, your income can be strong and steady, but it still raises questions for traditional lenders. Understanding how to navigate the process is crucial to securing financing that suits your specific situation.
For first-time buyers, it’s especially important to understand how lenders view self-employment and what steps can help strengthen your application. With the right paperwork, a clear income picture, and support from experienced professionals, getting a mortgage while self-employed is entirely achievable.
Unlike salaried employees with a T4 slip and predictable income, self-employed individuals often face more rigorous assessments from lenders. The concern isn’t that self-employed income is less legitimate, but that it’s harder to verify and assess. Here are some of the specific reasons why self-employed borrowers are evaluated more closely:
Income Fluctuations
Self-employed income can fluctuate from month to month or year to year, depending on the nature of the business or the type of contract work. Lenders prefer consistent, predictable income that shows stability over time. Inconsistent earnings make it more challenging for underwriters to accurately predict a borrower’s ability to make regular mortgage payments.
Business Write-Offs Reduce Net Income
Many self-employed individuals deduct expenses from their gross income to reduce taxable earnings. While this is an innovative business practice, it often results in lower reported income, which can hurt borrowing power. Lenders assess net income, not gross revenue, unless stated income programs or alternative lending options are considered.
Complex Financial Structures
Self-employed applicants may be sole proprietors, partners, or owners of an incorporated business. Each structure involves different ways of generating income—such as salary, dividends, or retained earnings—which can complicate the evaluation of income. Some lenders may not recognize all sources equally.
Lack of Standard Employment Documents
Traditional borrowers submit T4 slips and employer letters. Self-employed borrowers must provide multiple years of tax returns, financial statements, and, in some cases, business licenses or GST filings. If these aren’t readily available or organized, the process can slow down significantly.
Higher Risk Perception by Lenders
Statistically, lenders may see self-employed income as less secure, especially if the business is new or in a volatile industry. As a result, lenders may apply stricter criteria, such as higher down payments or stronger credit score requirements.
Difficulty Verifying Income Consistency
Without fixed salaries, lenders must examine a borrower’s history of deposits, contracts, and tax filings to assess consistency. If there are income spikes or seasonal fluctuations, lenders require clear explanations and supporting documentation to fully understand the situation.
Tax Arrears or Missed Filings
It’s more common for self-employed individuals to fall behind on tax payments or miss filings. Any outstanding tax balances or gaps in filing history can negatively impact mortgage approval and must be resolved or addressed before applying.
Ultimately, it’s not that lenders are reluctant to work with self-employed borrowers—it’s that they require a higher level of financial transparency and consistency to proceed confidently with an approval.
Preparing thorough documentation is one of the most critical steps in the mortgage process for self-employed buyers. Most lenders will ask for the following:
The cleaner and more organized your financial records are, the more confidence lenders will have in your ability to repay a mortgage.
Quick Tip:
If your taxes are not up to date or you owe a balance to the CRA, pay this off or set up a repayment plan before applying. Unpaid taxes are one of the most common reasons self-employed mortgage applications are declined.
One of the unique challenges self-employed applicants face is reconciling their business deductions with the need to show sufficient income. Many business owners reduce their taxable income through legitimate deductions—a smart tax strategy, but it can also reduce your mortgage eligibility.
Lenders typically look at your net income (after expenses), not your gross revenue. However, some lenders will consider a portion of gross income or add certain deductions back in to arrive at a more accurate picture of your true earnings. This is especially common with alternative lenders or through stated income programs.
A mortgage broker familiar with self-employed files can help present your income in a way that meets lender guidelines without asking you to alter your tax strategy drastically.
Self-employed home buyers in BC have access to many of the same mortgage products as salaried applicants. Still, the route to approval can vary depending on how your income is structured and the amount of documentation you can provide. Understanding your options can help you choose a path that aligns with your goals and financial profile.
These lenders offer the most competitive mortgage rates but require full documentation and strict adherence to qualification criteria. You’ll need two full years of verifiable income through personal tax returns (T1 Generals) and Notices of Assessment, a solid credit score (ideally above 680), and a low debt-to-income ratio. Traditional lenders may be ideal if you’ve been self-employed for several years and show consistent income with minimal write-offs.
Best suited for: Established self-employed individuals with strong credit and clean tax filings.
Monoline lenders specialize in mortgages and don’t offer other banking products, such as chequing accounts or credit cards. They often work exclusively with mortgage brokers and are known for slightly more flexible underwriting compared to traditional banks. While they still require full documentation, they may be more understanding of non-traditional income structures.
Best suited for: Self-employed borrowers with consistent income who might not fit big bank criteria but still have strong paperwork.
Alternative lenders are more flexible with income verification and will often accept stated income or bank statements as proof of earnings. They are accustomed to working with clients who have credit challenges, are recent self-employed individuals, or have inconsistent income. While the interest rates are higher than those of traditional lenders, they provide access where mainstream institutions may decline.
Best suited for: New business owners, applicants with significant write-offs, or those with less-than-perfect credit who still want to enter the housing market.
Some lenders offer stated income mortgages for self-employed borrowers. Instead of requiring full tax documentation, you declare your income based on your business performance, supported by business bank statements, invoices, or accountant letters. This option is particularly useful if your reported taxable income is low due to deductions, but your actual cash flow is robust.
Best suited for: Self-employed individuals with strong business cash flow but limited reported net income.
Private lenders are individuals or businesses that lend money outside of regulated financial institutions. They require minimal documentation and will often lend based on the value of the property rather than income. These are considered short-term solutions and typically come with higher interest rates and fees.
Best suited for: Buyers who need immediate access to financing but don’t currently meet standard lending criteria. Often used as a bridge to refinance later with a traditional lender.
Regardless of which lending path you choose, the right mortgage broker can make all the difference. A broker with experience helping self-employed borrowers knows how to structure your application, choose the right lender based on your business profile, and advocate for you throughout the process.
Entrust Mortgage collaborates with a broad network of both traditional and alternative lenders throughout BC, ensuring that even complex income scenarios can be matched with competitive mortgage solutions.
Quick Tip:
Alternative lenders aren’t just for buyers with poor credit—they’re often the go-to choice for self-employed borrowers who have strong cash flow but low reported taxable income due to business write-offs.
Some self-employed individuals consider incorporating their business to improve tax efficiency or build a stronger financial profile. While incorporation can offer benefits, it may also complicate the mortgage process depending on how income is drawn (salary vs. dividends) and how recently the corporation was formed.
In general, lenders prefer consistency and a two-year track record of income, regardless of whether it’s through a sole proprietorship or a corporation. If you’re considering incorporation but plan to apply for a mortgage in the next 12–18 months, it’s wise to consult both your accountant and mortgage broker before making changes.
Self-employed buyers must meet the same down payment rules as other buyers in BC:
Your down payment must be verifiable through bank statements showing the funds have been in your account for at least 90 days. If your down payment is a gift from family, you’ll need a signed gift letter and confirmation that the funds are not repayable.
Buying your first home in BC as a self-employed buyer is entirely possible—but preparation is key. With strong documentation, a proactive strategy, and support from a mortgage expert who understands the nuances of self-employment, you can present a compelling case to lenders.
Self-employment shouldn’t hold you back from homeownership. With the right approach, it can be a strength—not a setback. Taking the time to organize your financials, understand your lender options, and work with professionals who advocate for your success will make the process smoother and far more rewarding. With the right approach, it can be a strength—not a setback.
Some lenders may accept one year of income if you were in the same field as a salaried employee before becoming self-employed, but having two full years is the standard requirement.
Dividends can be used as qualifying income, but you’ll need to show consistency over two years and have solid financial statements to support it.
Potentially, yes. Increasing your declared income on paper can boost eligibility, but you’ll also pay more personal tax. This should be balanced carefully with your accountant.
There are no government programs specifically designed for self-employed buyers; however, some lenders offer stated-income programs or alternative qualification routes.
Typically, lenders require the down payment to come from personal savings, not business accounts. Transferring funds from your business will require documentation and explanation.
