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SELFEMPLOYED MORTGAGES WHAT YOU NEED TO KNOW ABOUT JACKIE WOODWARD MORTGAGE BROKER TMG 780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Self-Employed Mortgages

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Page 1: Self-Employed Mortgages

SELF-­‐EMPLOYED  MORTGAGES  

WHAT YOU NEED TO KNOW ABOUT

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 2: Self-Employed Mortgages

The purpose of this is to outline how the mortgage approval process works when you’re applying as a self-employed

borrower.

By the end, you should be well equipped to obtain a mortgage approval while self-employed.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 3: Self-Employed Mortgages

If you are self-employed, gather together ALL of your INCOME

documentation before your meeting for a mortgage approval.

This will most likely be a minimum of last 2 years of both personal and corporate income tax documents. If you don’t have these documents,

call ahead to discuss an alternative.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 4: Self-Employed Mortgages

If you haven’t been self-employed for 2 years, you’re in store for a detailed chat with

your independent Mortgage Broker or banker.

This type of employment comes with very different income confirmation requirements

than for a borrower who is an employee for a company, with no ownership in that company.

Mortgage qualification requirements are

dependent on your specific income/employment structure, which leads to more

info required at time of application.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 5: Self-Employed Mortgages

You’re considered a self-employed borrower if one or

more of the following apply to you;

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 6: Self-Employed Mortgages

à You own your own business, either incorporated or sole proprietor or partner à You are responsible for the payment of your own personal income taxes   à You work under contract with your employer and they do not deduct income taxes from your pay

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 7: Self-Employed Mortgages

One of the most important components of a mortgage application is the qualifying

income, or the borrower’s ability to repay the loan.

If you’re self-employed, there are 2 types of qualifying income that

are acceptable.  

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 8: Self-Employed Mortgages

VERIFIABLE INCOME

Which means you qualify using the income you report to the

government and pay taxes on; confirmable by providing your most recent 2 years tax filings.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 9: Self-Employed Mortgages

STATED INCOME

This allows you to state your income at a reasonable level for your occupation and time in the industry without having to “prove

it on paper”.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 10: Self-Employed Mortgages

Being self-employed can allow a person to write off expenses

related to the operation of their business in order to lower their

personal income and as a result pay less personal income tax.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 11: Self-Employed Mortgages

A “stated income” mortgage product will cater to this type of

borrower, but because income is not being confirmed by

acknowledgement from Revenue Canada, the minimum qualifying requirements for credit score and

down payment source and amount are different.

 

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 12: Self-Employed Mortgages

If you’re qualifying under a “stated income” program,

you are required to have at least a 10% downpayment.

 

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 13: Self-Employed Mortgages

If you have less than a 20% downpayment, your credit score and history must be very strong in order to be eligible for approval under “insured” self-employed

mortgage programs at best rates.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 14: Self-Employed Mortgages

As far as downpayment is concerned, the

requirements vary depending on what type of

lender you’re going through.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 15: Self-Employed Mortgages

If you’re applying for a stated income insured mortgage product with best rates, you must have at least 10% of the purchase price available from your own funds to

use for downpayment.

You can use a home equity line of credit, but cannot use any unsecured borrowings or gifted funds unless it’s

above the 10% from your own assets.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 16: Self-Employed Mortgages

When taking the alternative lender route, there are more

flexible downpayment options available, including seller financing, gifted funds, borrowed funds, or a

combination of all of them.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 17: Self-Employed Mortgages

Again, be aware when going through an alternative lender

under a “stated income” program, the rates are slightly higher than best interest rates and there is

also the possibility of being charged a lender fee.

Talk to your mortgage professional about some preliminary cost quotes

with the alternative lenders so you will know what to expect.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 18: Self-Employed Mortgages

When it comes to the other paperwork you could be

asked to provide, required documentation will vary

depending on your employment status and lender

conditions.      

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 19: Self-Employed Mortgages

All lenders will request proof that you are self-employed or

under contract.

As the documents requested will be specific to your business, discuss with your mortgage

professional what confirmation of self-employment you can provide

that would be acceptable to a lender.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 20: Self-Employed Mortgages

Some possibilities include: - Articles of incorporation - Business license - T1 generals showing statement of business related expenses

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 21: Self-Employed Mortgages

For the qualifying income conditions, if you’re applying with verifiable income, you will likely be asked to provide at least 2

years Notice of Assessments and/or full personal income tax returns showing your average earnings.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 22: Self-Employed Mortgages

If you’re “stating” your income, you could be asked for a self-declared income letter or bank

statements showing income deposits, among other

documentation.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 23: Self-Employed Mortgages

With regards to credit requirements, the better your

credit is, the more appealing your application is to a lender.

The minimum credit score to qualify for

the insured self-employed product is 700. If you’re score is less than that,

you still have options.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 24: Self-Employed Mortgages

A good credit score does not exempt you from providing

documentation, though it does help ensure you’re getting

maximum lender access and competitive interest rates.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 25: Self-Employed Mortgages

Don’t limit your options, use a mortgage professional that

has access to many lenders, which translates to many product offerings for you.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 26: Self-Employed Mortgages

If your mortgage has to be insured, make sure you have access to a lender that uses

all 3 mortgage insurance companies.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 27: Self-Employed Mortgages

If you don’t require an insured mortgage due to a larger

downpayment, it’s even more important to use a mortgage professional who has access

to multiple options, which translates to a higher chance

of approval for you.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 28: Self-Employed Mortgages

Don’t be afraid to ask your mortgage professional what kind of lender access they have and also if they have experience in

self-employed mortgages.

That experience could be the key to structuring your application to produce a favorable outcome.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 29: Self-Employed Mortgages

I can’t cover all the fine print of our self-employed mortgage products, so

be prepared for in-depth questions about your business, assets and

finances.

Full disclosure is ideal as it will help your mortgage professional place you with a lender whose requirements you meet and whose terms are appealing

to you too.

SELF-­‐EMPLO

YED  MORTGAGES  

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

Page 30: Self-Employed Mortgages

Do you have mortgage

questions?

LET’S CHAT

SELF-­‐EMPLOYED  MORTGAGES  

780-433-8412 [email protected] WWW.MORTGAGEGIR.CA

JACKIE  WOODWARD  MORTGAGE  BROKER  TMG