How to get a self-employed mortgage

By: Sandra MacGregor on October 23, 2025

Quick takeaway:

Traditionally, self-employed Canadians have had a harder time securing mortgages, since lenders look for a history of consistent income — which many freelancers and entrepreneurs often can't prove.
While freelancers and self-employed people try to benefit from a lower taxable income, lenders look for higher income from applicants as a sign of trustworthiness.
Some lenders accept "stated income," which allows self-employed people declair their actual earnings, backed by documentation like bank statements, invoices, and business records.
Freelancers and self-employed workers should try to have a great credit score, organized records that prove two years of successful self-employment, and work with a mortgage broker to secure a favourable mortgage.

According to Statistics Canada, as of 2025, there were approximately 2.7 million self-employed workers in Canada, representing about 13% of the workforce. While these workers — be they Uber drivers, entrepreneurs, consultants or creative freelancers — may enjoy unique benefits that come with being your own boss, they also face unique challenges when it comes to trying to enter Canada’s competitive housing market.

While there are a variety of factors that lenders consider when determining if a person qualifies for a mortgage, income is the most significant. When considering potential mortgage applicants, lenders tend to favour borrowers who are regular salaried employees because they can show proof of consistent income through T4 slips and predictable pay deposits.

Ultimately, lenders need to know that a borrower is creditworthy and will pay back the loan. It’s much harder to ease a lender’s concerns about repayment when you can’t definitively prove you’ve got a stable income.

Jump straight to:

Understanding the challenges
Stated income vs. taxable income
How self-employed Canadians can gain competitive rates for mortgages
The single best thing you can do to ensure success

Understanding the challenges

Being self-employed means you might face stricter scrutiny from lenders. Unlike salaried employees, your income may fluctuate, making you appear riskier.

Furthermore, while an entrepreneur or self-employed person can claim numerous legitimate tax deductions to reduce their tax burden, a lower taxable income can actually work against them when applying for a mortgage.

“[As a self-employed] business owner, you want to use every legitimate expense and deduction to lower your taxable income, which is great for keeping your tax bill down, but it's a killer for getting a mortgage,” says Steve Garganis, mortgage broker and president of MortgageNow.ca, as well as editor and founder of Canada Mortgage News.

According to Garganis, lenders typically look at your net, after-expense income, rather than your gross revenue, “So, you have this fundamental conflict: you're trying to tell the Canada Revenue Agency you made as little as possible, while trying to convince a bank you made as much as possible. You can't have it both ways… income inconsistency and the quest for tax efficiency are, by far, the biggest hurdles.”

Stated income vs. taxable income

Taxable income, which is what most prime lenders rely on when assessing mortgage applicants, is the amount earned after allowable expenses and deductions. However, self-employed income can vary significantly and small businessowners may minimize income to pay less tax.

Stated income, on the other hand, lets self-employed people and entrepreneurs declare what they actually earn rather than the taxable income stated on their tax return. This gives non-salaried workers a better chance at qualifying for a loan.

To prove stated income, borrowers can provide “alternative documentation.” On top of at least two years of taxable income, this type of documentation would include things like copies of their bank statements going back as far as a year, investment statements, business records such as quarterly reports, audited financial statements, invoices, client contracts and your GST/HST returns.

Garganis cautions, however, that applicants still have to qualify for stated income programs

“Many people think they can just state their income without much proof,” he says. “Those days are largely gone, especially if you want a mortgage from a prime 'A' lender.”

Additionally, these programs can be more expensive, especially for people considering alternative or private lenders whom, he says, “come with strings attached: higher interest rates, fees and the need for a much larger down payment – often 35% or more.”

To figure out which option is best for you, Garganis suggests working with a broker early in the process.

“Most front-line bank employees are used to dealing with salaried T4 employees and may not understand the nuances of a self-employed file,” he says. “A mortgage broker who specializes in these types of applications knows which lenders have more flexible programs and how to present your unique financial story in the most compelling way.”

How self-employed Canadians can gain competitive rates for mortgages

To hope to get a mortgage with good terms and a reasonable interest rate, self-employed applicants commonly need to exceed standard minimum requirements. Aim for:

A higher down payment. At least 10% down payment or 20% for an uninsured mortgage and homes over $1.5 million. “A down payment of 20% or more not only helps you avoid mortgage default insurance but also shows the lender you have skin in the game, reducing their risk,” says Garganis.
A strong credit score (680 or more). You have to convince your lender that, while you may not have a stable income, you’ve nonetheless established and maintained a stellar credit score. Garganis suggests getting your credit score well above 700.
Two years of provable successful self-employment backed by tax returns and possibly business licenses or audited statements.
39% Gross Debt Service (GDS) ratio and 44% Total Debt service ratio (TDS)
Well-maintained business records going back at least two years. Garganis notes: “Lenders want to see a well-run business. This means having your financial statements and tax filings prepared by a professional accountant. Keep your books clean using accounting software. Have your Notices of Assessment (NOAs) from the CRA ready and ensure your HST/GST remittances are all paid up to date.”

What’s the single best thing you can do to ensure success? Plan ahead.

According to Garganis, having a long-term strategy is key to getting the best mortgage.

“Many self-employed individuals only start thinking about their income for mortgage purposes when they find a house they love,” he says. But by then, it’s too late. “The groundwork needs to be laid one to two years in advance. This might mean consciously deciding to claim fewer expenses to show a higher net income on your tax returns. Yes, you’ll pay more in taxes, but think of that extra tax as part of the ‘cost’ of getting into the home you want.”

Getting a mortgage when you’re self-employed or an entrepreneur certainly requires more long-term planning and documentation than a salaried employee, but it is achievable. The key is to start planning to secure a mortgage long before you actually need to apply.

As Garganis says, “It’s all about preparation. If you get your ducks in a row ahead of time, the process can be surprisingly smooth.”