The recent changes to mortgage financing rules by the Canadian Government in April 2011 made the qualifying guidelines tighter for self employed mortgage borrowers.
A true self employed mortgage borrower is a person who cannot verify income the traditional way by employment letter or tax return. For example a self employed borrower earns $100,000.00 a year but only declares $20,000.00 on the tax return. This lack of verification of income in the past has proved challenging for self employed clients to obtain a mortgage without having to come up larger down payments, possibly 25% to 35% or pay higher interest rates through high risk lenders. CMHC the Canadian Housing and Mortgage Corporation are no longer insuring high ratios (less than 25% down) self employed mortgages. The good news however is that there are still other insurers in Canada who will insure a self employed mortgage up to 90%. So with 10% down payment a Self Employed borrower can obtain a mortgage. Typical qualification requirements are good credit score above 680 and proof of self employment for at least two years.
Call me or send me a email for more information on Self Employed Mortgages.