Last updated October 2026

Self-Employed Mortgages in BC: How You Qualify

Yes! You can get a mortgage when you’re self-employed. Lenders look at your tax returns instead of pay stubs, so the paperwork works a little differently. Even if your returns show less than you actually earn, you may still have good options. Our team at Auxilium helps self-employed buyers and homeowners across Victoria and Vancouver Island find the one that fits.

The short version  

Here’s what you need to know.

• Most lenders average your last two years of tax returns, then adjust for business expenses you wrote off and/or will allow a gross-up of your business for self-employment income.  The actual amount of gross-up varies from traditional to non-traditional lenders. 
• Typically, the same debt servicing limits apply to you as to someone on salary. The major difference is the way in which your income is calculated versus someone who is an employee.  
• If your taxable income falls short, we have stated income, corporate income addback and alternative lender programs that may still work.
• Less than two years in business? Not a problem; there are still alternatives available to us that may work.
• Self-employed borrowers who qualify with a  conventional and/or traditional lender typically are offered the same rates as everyone else.

Who qualifies as self-employed?

You are “self-employed” if you run your own business and report the income yourself. That includes sole proprietors, incorporated business owners and independent contractors. Each one has a different paper trail, and  lenders treat the income a bit differently depending on which box you fall into.  

What is a sole proprietor?

A sole proprietorship is a very common setup in Victoria and across Vancouver Island. You run an unincorporated business, and all of its net income counts as your personal income. Whether you pay yourself a steady wage or draw money as cash flow allows, the total lands on your tax return.

How do lenders calculate your income?

Lenders start with the income on line 13500 (Business Income) and/or  13700 (Professional Income)   of your last two tax returns, and average the two years. They can  then either add back some  business expenses you wrote off and/or  gross up the income, which one depends on the lender.  The result is your qualifying income. It needs to cover your debts plus the mortgage, heat and property taxes on the home you want plus any/all additional debts that are required to be debt serviced

There are two common ways to make that adjustment. CMHC’s self-employed program allows either one for sole proprietors and partners.

Adding 15% to your average

The simplest method allows you to gross up your two-year average to your two-year average. The thinking is that some of what you wrote off as expenses could have been paid to you as wages.

Adding back specific write-offs

The other method adds back deductions that lowered your taxable income without taking cash out of your pocket. A common one is capital cost allowance, which is the depreciation you claim on equipment or a work vehicle. There are others as well; which ones depend on the lender.

Here’s how that can look: 

Or the gross-up method would be $66,000 X 1.15 = $75,900

We look at both methods and use the one your lender accepts and that your file supports best. Your notice of assessment from the Canada Revenue Agency (CRA) shows your line 13500  figure, and lenders will ask for a copy to confirm it.

Of course, if you have any additional income such as from a rental property and/or investments, dividends, etc., we can potentially use it, so long as it meets the lender’s criteria in order to do so.  All of these would comprise your total income, which is line 15000 of your T1 General tax return.  

How much can you borrow when you’re self-employed?

You can borrow as much as anyone else with the same qualifying income. Under CMHC’s guidelines, your housing costs can be up to 39% of your gross income, and your total debt payments can be up to 44%. Lenders also test your payments at a higher rate than you’ll actually pay. That test rate is your contract rate plus 2%, or 5.25%, whichever is greater.

The part that changes for you is the income figure. Getting that calculation right is where using a mortgage broker can make a big difference.

What if your tax return income is too low?

If your tax returns don’t show enough income, you still have options. Depending on your business, we may be able to use a stated income program, your corporation’s income, or your business bank statements instead. Each route suits a different kind of file.

Stated income (Business for Self)

Stated income lets you declare income higher than your tax return shows, as long as it’s reasonable for your business type. The lender and mortgage insurer (all applications with less than 20% down have to be insured)  check it against your industry, time in business, and business revenue. A furniture maker who nets $30,000 may be able to state $50,000. A home care worker with the same net income may not

These programs usually ask for good credit and at least 10% down. When you put down less than 20%, you’ll pay a mortgage insurance premium. You don’t pay it out of pocket; the premium is added to your mortgage and paid to the insurer. Read more about CMHC Mortgage Loan Insurance here. 

Business bank statements

Some alternative lenders qualify you using 6- 12 months of business bank statements instead of your tax returns. Typically the rate is a bit higher, and a lender fee usually applies, so we treat this route as a short-term step. Once your tax returns catch up with your business, we can work on moving you to a regular lender. If your credit needs some attention too, our bad credit mortgage page has more.

All of these programs have moving parts. Talking with us well before you need the mortgage gives you the most room to plan, whether you’re buying, renewing or refinancing.

What if you own a corporation?

If you own a corporation, lenders look at how you pay yourself and the company’s financial health. Lenders treat salary, dividends, and money left in the business differently.

Why do salary and dividends count differently?

Salary is the easiest for a lender to count because it works like a wage. Your corporation reports it on a T4 and withholds tax at source. A lender can match the T4 to your tax return and treat it like employment income.

Dividends come from the company’s after-tax profit. You decide when to pay them and how much, and the corporation isn’t obligated to pay any next year. Because you can raise, lower, or stop them at will, many lenders see them as less predictable.

Money you leave in the company doesn’t show up on your personal tax return. Some lenders will consider it and others won’t.

Can your corporation’s income help you qualify?

Often, yes. Some lenders will count part of your corporation’s net income in addition to what you pay yourself and allow you to use a portion or all of them depending on the lender.   Others accept a stated income that reflects what the business really earns. Either way, lenders want financial statements prepared by your accountant, so it helps to bring your accountant in early.

Your accountant looks after the tax side of how you pay yourself. We show you how a lender will read the result. CMHC’s self-employed program is open to incorporated companies and sole proprietors, so business owners also have insured options.

Conventional lenders won’t gross up either salary or dividend income.   However, they will allow the use of a portion of the net income for the year as reported on the financial statements based on a 2-year average.

What documents do you need?

The exact list of documents will depend on how your business is set up, but most applications start with the documents below. Having them ready before you apply saves a lot of back and forth.

If you’re a sole proprietor

Gather these to start:

• Last two years of full tax returns (T1 General plus all schedules)
• Last two years of notices of assessment from the CRA
• Last two years of your statement of business activities (T2125 Schedule) 
• Proof you’ve been in business for two years, such as a business licence or GST registration

If you’re incorporated

You will need the following:

• Last two years of full tax returns (T1 General plus all schedules)
• Last two years’ notices of assessment from the CRA
• Two years of financial statements for your corporation, prepared by your accountant
• Your articles of incorporation and  a recent annual filing confirming you are in good standing
• A copy of your transparency register may be requested to ensure confirmation of all beneficial owners

What if you’ve been self-employed for less than two years?

You may still qualify. CMHC recommends at least 24 months of running your business or working in the same line of work, and it offers flexible options for people newer to self-employment. Those options can weigh things like buying an established business, cash reserves, predictable earnings, your training and how well you’ve managed credit.

If you moved from a salaried job to running your own business in the same field, tell us. That history often helps. A high-income, high-credit co-signer can be another way to bridge the gap.

A renovation business owner refinancing her home 

“We recently worked with a client who owns an incorporated design and renovation company. To keep her taxes efficient, she wasn’t paying herself much of a salary. Her business had also come through two challenging years, so its net income was minimal. That left her unable to qualify for a refinance with a conventional lender.

We used a 12-month business bank statement program, which showed her cash flow had improved over the past year. That let us state a reasonable income with an alternative lender. She refinanced her home, paid out her debt and dramatically improved her cash flow.” – Kam Brar

A business owner paying himself in dividends 

“Another self-employed client had plenty of net income in his business but chose to pay himself only a minimal amount in dividends. We found a traditional lender that let us use 60% of his company’s average net income over the past two years. He qualified for a conventional mortgage at the best rates.” – Kam Brar

Frequently asked questions

Here are answers to the questions self-employed buyers and homeowners ask most often.

Do self-employed borrowers pay higher mortgage rates?

Not usually. When you qualify through a traditional lender, your rate is typically the same as someone on a salary. Rates are higher with alternative lenders, so we treat them as a stepping stone, not a long-term plan.

Do lenders use gross or net income when you’re self-employed?

Lenders use your net income, which is what’s left on your tax return after business expenses. They can  then adjust it, either by adding 15% or by adding back certain write-offs. If the result still falls short, we have stated income and/or corporate add-back programs that may help.

Is it harder to get a mortgage when you’re self-employed?

It takes more paperwork, but approval comes down to getting your file in front of the right lender. Most of the trouble starts when a bank looks at line 15000 on its own. As brokers, we can take your file to lenders who understand how business owners earn.

Can you refinance or get a home equity line of credit if you’re self-employed?

Yes. The same income-calculation methods apply when you refinance or set up a home equity line of credit. Our renewal and refinance page walks through your options.

Can you get a mortgage if you owe taxes to the CRA?

Owing taxes or filing late can hold up your application. Conventional lenders usually want to see that you’re current with the CRA, both in terms of filing and what you owe them.  They will normally require that your CRA debt be paid in full before closing and not rely on a refinance to do so.  However, some conventional lenders will allow you to pay this debt out from a refinance on a case-by-case basis.  Typically, most alternative lenders will let you pay out CRA debt from a refinance as long as the overall deal makes sense.  Finally, at Auxilium Mortgage, for clients who would otherwise qualify with a conventional lender if the CRA debt weren’t outstanding, we have an in-house program that lets you borrow the funds needed to pay off that debt in advance.  You would be required to pay this loan back upon the closing of your mortgage.  This option is typically available on refinances and requires sufficient equity in your property; our team would be happy to review it with you and see if you qualify.  If you can’t pay the balance in full and aren’t in a hurry to refinance and/or purchase a new property, you can contact the CRA to explore setting up a payment arrangement.

What should you do next?

Being self-employed shouldn’t keep you from owning a home or refinancing your current one. While it’s ideal that you’ve been self-employed for at least two years, it’s still possible if you aren’t.  Or you might simply not be reporting enough income; again, we have solutions that focus on your cash flow, not your tax returns. 

For those of you buying your first home, our First-Time Home Buyers page is another great place to start.

So if you’re planning on buying, renewing or refinancing in the next couple of years, now is a great time to talk with us! Book a time to meet with us that works for you, or give us a call at 250-590-6520 (toll-free 1-855-590-6520). Your first consultation is free. 

DISCLAIMER: This article is written from the perspective of a mortgage professional and the rules that we must follow when qualifying self-employed/business individuals. This article should be treated as such. Refer to your accounting professional for your specific needs. 

Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across B.C. We’ve been in business since 2011 and have access to dozens of lenders to help you meet your goals.