Almost half (45%) of Canadians will be self-employed by 2020, according to Intuit. In some cases, these individuals are supplementing employment income by working on the side. But the trend is clear: self-employment is becoming increasingly common in Canada. Here’s a look at how being self-employed can affect the mortgage buying process, along with some tips to help get you into a new home.
Proving Income as a Self-Employed Canadian
When applying for any type of mortgage, the bank requires proof of income. For those who are self-employed, the process can be a little more complicated. There are two main ways business owners, freelancers and independent contractors can prove their income when buying a home:
Proved income: The average amount you’ve earned over a period of time, typically at least two years.
Stated income: A reasonable estimate of your income based on the type and size of your business. Typically, you can only use this method if you’ve been in business for at least a few years…