What Do Lenders Actually Look For in Someone Who Is Self‑Employed and Trying to Get a Mortgage
If you’re self‑employed in Alberta and you’re thinking: “Can I really get a mortgage? Will I qualify?” — you’re not alone.
Renee Huse, founder of Spire Mortgage Team in Alberta meets clients all the time who have built their business, wear the many hats, and still wonder whether owning a home is realistic. It can feel more… complicated. We get that. The good news? With the right preparation you can get it done.
What We'll Cover
- What lenders look for when you’re self‑employed
- Alberta case study: real numbers, real people
- Comparing self-employed scenarios
- Glossary of key terms
- Common questions about self-employed mortgages
What Lenders Look For When You’re Self‑Employed
When you’re employed by someone else, lenders are used to: pay stubs, employer letter, consistent hours. When you’re self‑employed, things shift: you’re the business, the income may fluctuate, you might be incorporated, you may deduct a lot, you might reinvest in your business. So lenders ask: “Can we trust the income? Is it consistent enough? Will you be able to make the payments for years to come?”
Income history & documentation
Lenders want to see that your business isn’t brand‑new and that your income is predictable or at least steady. Most expect at least two years of personal Notices of Assessment (NOAs) and corresponding tax returns. If you’re incorporated, they’ll want to see your company’s financials too. The more income you show on paper, the stronger your case.
Credit score & payment habits
Lenders want to see a great credit score — someone paying their bills on time and keeping credit utilization low. It’s not just about income; it’s about financial habits. If your income is a bit less traditional, the rest of your file needs to shine brighter.
Rainy day cushion
Having cash in the bank or available room on your credit cards helps — it tells lenders you have backup if business slows down. It doesn’t have to be six figures. Just enough to show you’ve got some breathing room.
Income consistency (but not sameness)
People think lenders need to see the same amount hit your bank account every month. Not true. What they really want is a reliable pattern — that your income makes sense across the year. That’s why some lenders ask for 12 months of business bank statements. If your business is seasonal, that’s fine — just help the lender see that it works over time.
Business stability & professionalism
Length of time in business, GST/HST registration, business accounts — all signs of reliability. If your income and business banking are a mess, it makes lenders nervous. Professional bookkeeping can go a long way.
Down payment strength
If something else in your file is shakier — like inconsistent income — down payment becomes everything. The more skin you have in the game, the more likely lenders are to lend.
Alberta Case Study: The Smiths in Edmonton
Client profile: Jim, HVAC contractor (sole prop), and Sara, online retailer (sole prop). Looking to buy a $550,000 home in St. Albert.
Jim’s average net income: $95,000 over two years. Sara’s reported income: $40,000–$45,000. Combined: strong credit (high 700s), minimal debt, 20% saved for down payment.
Strategy: We verified both incomes with NOAs and used 12-month business bank statements to show Sara’s growing business. Their down payment strengthened the file, and we matched them with a lender familiar with self-employed income nuances.
Estimated monthly payment: ~$3,100/month (based on a conventional 5-year fixed at 4.34%). With a healthy cash buffer, they were in great shape to qualify.
Outcome: They bought the home, kept their payment under budget, and are now positioned to refinance for a future investment property in Calgary.
Comparing Self-Employed Mortgage Scenarios
| Scenario | Pros | Challenges | Cash Flow Impact |
|---|---|---|---|
| Sole proprietor, 2+ years | Clean tax history, simple docs, stable profile | Tax deductions can reduce usable income | $100K income → ~$3,100/mo budget comfort |
| Incorporated, pays salary/dividends | Tax efficiency, possibly higher usable income | Requires corporate financials, more review steps | $60K salary + $30K dividends → must show consistency |
| Newly self-employed (<2 years) | Can use stated income or bank deposits | Higher down payment and interest likely | Needs strong cash flow or big cushion |
Glossary
Notice of Assessment (NOA): CRA summary of your tax return — key for proving income to lenders.
Qualifying rate: The stress-tested interest rate lenders use to make sure you can handle future increases.
Loan-to-Value (LTV): The percentage of your home’s value that you’re borrowing — lower LTV = lower risk to lender.
GDS / TDS ratios: Gross and Total Debt Service ratios — they measure how much of your income goes toward debt and housing costs.
Stated income: An alternative income method using bank statements or business docs instead of just taxes.
A/B/Private lenders: A-lenders = banks/credit unions. B-lenders = more flexible, slightly higher rates. Private = highest rates, fewest rules.
Bank statement mortgage: A program where lenders review 6–12 months of business deposits to assess your income.
Common Questions About Self-Employed Mortgages
Can I get a mortgage if I’ve only been self‑employed for one year?
It’s harder, but possible. You’ll need stronger credit, a larger down payment, and solid bank statements to show income stability.
Does deducting a lot of expenses hurt my chances?
Yes. The lower your net income on paper, the lower the mortgage you can qualify for — even if your actual revenue is strong. Talk to us before tax season if a mortgage is on the horizon.
What kind of down payment do I need?
Minimums still apply (5% for homes under $500k, 10% for the portion between $500k–$999k), but more down = better terms, especially if you’re self-employed.
Will I pay a higher interest rate because I’m self-employed?
Not necessarily. If your income and credit are strong, you can often access the same rates as salaried borrowers. Higher rates apply only if you go alternative due to documentation or credit concerns.
What if my income is seasonal?
That’s okay — as long as the pattern is clear and deposits over 12 months tell the right story. We help package that story properly for the lender.
Let’s Build Your Plan — On Your Timeline
Being self-employed doesn’t mean you can’t get a mortgage. It means we take a little extra care — and that care pays off. With the right strategy and documents in place, we can build a file that stands up strong in front of any lender.
Give us a call or fill out an application at this link: https://spiremortgage.ca/apply-now and our team will get in touch with you to start building a plan that suits you.
