Effective, April 19, 2010, there are new rules for self-employed Canadians as it relates to qualifying for a CMHC-insured mortgage. This is especially relevant if you are:
- Paid 100% on commission
- Self-employed and counting on a 5% down payment to conclude a mortgage transaction and purchase
- Self-employed for over three years
CMHC says:
- The Self-Employed program is intended for self-employed borrowers “who have difficulty providing documentation for their current income level.” These are often people who’ve recently begun to work for themselves. Self-employed borrowers who choose to apply under this program, and not verify their income using traditional means, will have to put down 10% when purchasing a home.
- Self-employed borrowers in the same business for over three years will no longer be eligible for approval without traditional proof of income (ie. you must show sufficient income on line 150 of your personal tax return).
- A business license, GST license, or articles of incorporation will be required to validate the applicant’s length of self-employment.
- Commissioned employees are no longer eligible for approval under the Self-Employed program (ie. sufficient income must show on line 150 of your personal tax return).
These rule changes apply to stated-income mortgages only. If you are self-employed and fully proving your income on line 150 of your personal tax return, then you can ignore this post.
Speak to a mortgage professional for complete details.
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