Mortgage for self-employed in Canada. How much down?

There are 20% of Canada's population works as self-employed professionals and using their corporations to minimize taxes. And as you know there are different rules applied to self-employed who want to buy their first home. And one of the question you may have is how much downpayment you need when working as a self employed.

If you start googling "how much down payment needs self-employed" different websites provided the different answers. Some are telling it is 10% down, some 5%. And in fact, both these numbers are right. How is it possible?

The answer was very simple. If you self-employed person and the income you was reporting to CRA in your Notice of Assessment (NOA) is enough to qualify for a mortgage, you need only 5% down. And if the amount you have in your NOA is not enough, you can combine it with your spouse.

But what about 10% down, why most of the websites including government websites tell than self-employed should provide 10%. That is right, in case if you can not provide sufficient proof of income, you must put down at least 10%, and you will have to find a lender who uses Genworth or Canada Guaranty.

So what should you do if you are self-employed and looking to buy your first house?

Talk with a bank or mortgage broker. After providing your income to them, you will be able to get a clear answer of what amount of mortgage you qualify and how much down payment you need.

What documents required from self-employed by a mortgage broker?

Your mortgage broker will ask you for two types of materials (for the last two years):

Your personal financial information

  • T1 General
  • Notice of Assessment
  • all your current payments, such as auto financing, rent payment, credit cards payments

Your company financial statements

  • Article of Incorporation
  • Last two years financials (income statement + balance sheet)

Buying your first property looks like a lot of work, but in fact, it is not, most of the job done by your real estate agent, mortgage broker, and lawyer. All then you need to do is provide documents they ask from you.