CMHC is giving lenders more guidance and flexibility on determining whether a self-employed person qualifies for a mortgage.
OTTAWA — Canada Mortgage and Housing Corp. is making changes intended to make it easier for the self-employed to qualify for a mortgage.
The national housing agency says it’s giving lenders more guidance and flexibility to help self-employed borrowers. Self-employed Canadians may have a harder time qualifying for a mortgage as their incomes may vary or be less predictable.
Self-employed Canadians are key contributors to strong and vibrant communities and make up about 15% of Canada’s population. However, they may have difficulty qualifying for a mortgage as their incomes may vary or be less predictable.
In line with the National Housing Strategy’s mission to address the housing needs of all Canadians, Canada Mortgage and Housing Corporation (CMHC) is making a number of changes aimed at giving lenders more guidance and flexibility to help self-employed borrowers:
- Providing examples of factors that can be used to support the lender’s decision to lend to self-employed borrowers who have been operating their business for less than 24 months, or in the same line of work for less than 24 months such as acquiring an established business, sufficient cash reserves, predictable earnings and previous training and education; and
- Providing a broader range of documentation options to increase flexibility for satisfying income and employment requirements when qualifying self-employed borrowers such as the Notice of Assessment (NOA) accompanied by the T1 General, the CRA Proof of Income Statement and the Statement of Business or Professional Activities (T2125) to support an “add back” approach for grossing up income for sole proprietorship and partnerships.
These enhancements, which apply to both transactional and portfolio insurance, will take effect October 1, 2018.
As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.
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