12 Ways to Improve Your Chances of Buying a House as a Small Business Owner

Buying a home as a business owner in Canada isn’t always straightforward. Unlike salaried employees who can easily show steady pay stubs, self-employed buyers often face extra scrutiny from lenders. You’re asked for years of tax returns, financial statements, and proof that your business income is both stable and sustainable. 

Even with solid earnings, your application can still hit roadblocks. Business write-offs may reduce your reported income, your cash flow might fluctuate seasonally, and traditional lenders often don’t account for the realities of entrepreneurship. For many hardworking business owners, getting approved for a mortgage feels less about financial strength and more about fitting into rigid lending boxes. 

The good news is that owning a home as a small business owner in Canada is possible. By preparing strategically, improving key financial indicators, and exploring flexible options like rent-to-own, you can make homeownership achievable on your own terms.

In this article, you'll learn 12 practical ways to improve your chances of buying a home, plus how rent-to-own can help if you're not quite mortgage-ready yet.

Key takeaways

• Lenders require at least two years of verified business income, with consistent financial records
• Keeping your credit strong and debt low is critical for mortgage approval
• Minimizing deductions in advance of your application can improve your qualifying income
• Rent-to-own is a practical option if you're not yet eligible for a traditional mortgage
• Working with professionals familiar with self-employed income structures can improve your approval odds

Is it hard for business owners to get a mortgage?

Most Canadian lenders consider self-employed applicants as higher-risk borrowers. Unlike salaried employees who provide pay stubs, self-employed individuals must show proof of consistent income over multiple years. That means small business owners will likely need to provide:

• At least two years of tax returns (T1 General)
• CRA Notices of Assessment (NOA)
• Business financial statements

Another challenge? Small business owners often reduce their taxable income through legal deductions. This is great for tax benefits, but not for mortgage qualification. This can significantly reduce your “qualifying income,” the number lenders use to calculate what you can afford.

Read more about the challenges of buying a home as a new business owner

12 tips for buying a house if you're self-employed

Here are twelve ways you can improve your chances of qualifying for a mortgage as an entrepreneur to make homeownership a reality, even with self-employment income.

1. Keep business and personal finances separate

One of the first things lenders evaluate is your personal income. If your personal and business finances are mixed together, it becomes difficult — sometimes impossible — for them to accurately assess your ability to repay a mortgage.

Here’s what to do:

• Open separate bank accounts for your business and personal use
• Use different credit cards for business purchases
• If you’re incorporated, pay yourself a consistent salary or dividend
• Track your income clearly and document transfers between business and personal accounts

Financial separation not only helps with mortgage applications, but also simplifies bookkeeping and tax filings. Lenders want to see clear, predictable income streams — and separating your finances is the first step toward achieving that.

2. Improve your credit score

Your credit score is one of the most important factors in your mortgage application. In Canada, a score of 680 or higher puts you in a better position to qualify for favourable mortgage rates from A-lenders, like major banks or credit unions.

To build or improve your credit score:

• Always pay your bills on time, including credit cards, utilities, and phone plans
• Keep your credit utilization below 30% of your limit on each card
• Limit the number of new credit inquiries, especially in the year before applying
• Regularly check your credit report through Equifax or TransUnion, and correct any errors

If your score is below 680, you may still qualify through a B-lender, but expect a higher interest rate and additional conditions.

3. Minimize tax deductions before applying

One of the biggest challenges for small business owners is showing enough income on paper. Many entrepreneurs reduce their taxable income through legitimate write-offs, such as business travel, equipment, and home office expenses. This reduces your tax bill — but it also lowers your net income, which is what lenders use to assess affordability.

In the 1 to 2 years before applying:

• Re-evaluate your discretionary deductions
• Focus on showing higher net income, even if it increases your taxes temporarily
• Work with an accountant who understands both tax planning and mortgage qualification

The goal is to maximize your qualifying income without compromising your business’s financial integrity.

4. Prepare two years of strong financial documentation

Lenders need to see proof that your income is consistent and sustainable. As a self-employed applicant in Canada, you should be prepared to submit:

• T1 General personal tax returns for the past two years
• CRA Notices of Assessment (NOAs) for the past two years
• T2 corporate returns, if your business is incorporated
• Profit and loss statements
• Balance sheets and business bank statements

Lenders may also request a letter from your accountant verifying your business status, income structure, and overall financial position. These documents form the backbone of any self-employed mortgage application, helping lenders understand your long-term earning stability.

5. Reduce your debt-to-income ratio

Your debt-to-income ratio is a key indicator lenders use to determine if you can afford your mortgage. They calculate two figures:

• Gross Debt Service (GDS): the percentage of your income used for housing costs
• Total Debt Service (TDS): the percentage of your income used for housing plus all other debt payments

To qualify with most lenders:

• GDS should be below 39%
• TDS should be below 44%

To improve these ratios:

• Pay off high-interest credit cards and lines of credit
• Avoid taking on new debt before applying
• Consider consolidating debts into a single, lower-payment loan
• Avoid leasing or financing new business equipment before your application

The lower your debt, the more financial flexibility you’ll show on paper — and the more confidence lenders will have in your ability to manage mortgage payments.

6. Increase your down payment

A larger down payment can strengthen your mortgage application in several ways. It lowers your monthly mortgage payments, reduces the lender’s risk, and may eliminate the need for mortgage insurance.

Minimum down payments in Canada:

• 5% for homes under $500,000
• 10% for the portion between $500,000 and $999,999
• 20% for homes over $1 million

Benefits of increasing your down payment:

• Better mortgage rates and terms
• Lower total interest paid over time
• More flexibility with lender options
• May improve approval chances, especially if your income is variable

If you’re a first-time home buyer, you can also use up to $35,000 from your RRSP through the Home Buyers' Plan (HBP) to help fund your down payment.

Read more about 9 best ways to save up for a down payment to buy a home

7. Build a cash reserve

Even with a good down payment, lenders want to see that you have liquid savings to fall back on in case of emergencies or business slowdowns. A healthy cash reserve shows that you’re financially stable and capable of handling unexpected expenses.

Aim to save at least 3 to 6 months of housing and living expenses, including:

• Mortgage payments
• Utilities
• Groceries and transportation
• Insurance premiums
• Business obligations (if self-financed)

These funds should be readily available — not locked in long-term investments — and should not include your down payment.

8. Work with a mortgage broker who understands self-employed income

Many traditional brokers or bank representatives may not be familiar with the complexity of self-employment income. A broker who specializes in working with business owners can help:

• Identify lenders who accept alternative documentation
• Present your income in a way that meets underwriting criteria
• Anticipate and resolve potential issues in your application
• Recommend short-term strategies if you're not quite ready to qualify

An experienced broker acts as your advocate, helping you navigate a process that often feels tailored to salaried employees.

9. Explore alternative lenders

If your application doesn’t meet the strict requirements of a major bank (A-lender), you still have options. Private lenders and credit unions may offer more flexible lending criteria, especially for self-employed applicants.

What to expect:

• Slightly higher interest rates
• Shorter mortgage terms, often 1 to 3 years
• More lenient requirements for credit score and income proof
• Opportunity to refinance with an A-lender once your financial situation improves

Alternative lenders can be a valuable bridge if you’re close but not quite mortgage-ready for traditional financing.

10. Use a co-signer or guarantor

If your income is too low or inconsistent to qualify on your own, a co-signer can strengthen your application. This is typically a parent, spouse, or family member who:

• Has stable, verifiable income
• Maintains a strong credit score
• Is willing to share legal responsibility for the mortgage

The co-signer’s income and credit are considered along with yours, increasing your borrowing capacity. However, the co-signer is equally responsible for the debt, so both parties must understand the long-term implications.

11. Time your mortgage application strategically

When you apply matters. Seasonal income, tax filings, and business activity all impact how your application looks to a lender.

Apply during a time when:

• Your business is performing well
• Your financial statements show consistent or increasing income
• Your credit score is stable
• You’re not taking on any large new expenses

Avoid applying right after a slow quarter, large tax deduction, or new financing. Lenders assess recent performance as a sign of future reliability, so present your finances in their best light.

12. Consider rent-to-own if you’re not mortgage-ready

If you’re not quite ready to qualify for a traditional mortgage, rent-to-own can be a practical alternative, especially for small business owners with strong income potential but challenges like limited credit history, inconsistent earnings, or a smaller down payment.

What is rent-to-own?

Rent-to-own (also known as lease-to-own) is a home buying arrangement that allows you to move into your future home today, while you work toward qualifying for a mortgage in the near future.

Rather than purchasing the home upfront, you rent it from a rent-to-own company for a set period — typically two to four years. During that time, you save for your down payment and improve your financial profile. At the end of the rental term, you buy the home at a pre-agreed price.

This approach gives you time to build mortgage eligibility without putting your homeownership goals on hold.

Who is rent-to-own best suited for?

Rent-to-own may be a strong fit if you:

• Are self-employed and need more time to show stable income
• Have recently started your business and don't meet traditional lending criteria
• Are rebuilding or establishing credit
• Need to save for a larger down payment
• Want to lock in a home now while you continue improving your finances

How rent-to-own works in Canada:

1. You choose the home you want to live in — you can work with a real estate agent to find your ideal residential property or browse rent-to-own listings online.
2. A rent-to-own company purchases the home on your behalf
3. You sign a rent-to-own agreement that outlines your lease period (usually 2–4 years), future purchase price, and rent structure
4. You rent the home while working toward mortgage readiness
5. A portion of your monthly rent is set aside and credited toward your future down payment
6. Once you qualify for a mortgage, you buy the home at the agreed-upon price

Why rent-to-own works for small business owners

Many self-employed Canadians find themselves in a position where they can afford a home, but don’t yet qualify for a mortgage due to:

• Fluctuating income
• Short business history
• Low or recovering credit scores
• High reported expenses due to legal tax deductions

Read how rent-to-own helped small business owners achieve homeownership success

Improve your chances of buying a home as a small business owner with rent-to-own

If you’re self-employed and not quite ready for a mortgage, Requity Homes can help you bridge the gap through a structured rent-to-own program built for Canadians.

Requity Homes helps small business owners move into their future home now while building the financial foundation to qualify for a mortgage later.

Here’s how the Requity program works:

• Step 1: Apply to pre-qualify. Check your eligibility and budget, it’s free and there’s no impact on your credit
• Step 2: Get full approval. Submit documents to verify income and financials
• Step 3: Find your dream home. You choose the home, Requity Homes buys it for you. Browse rent-to-own listings in Canada.
• Step 4: We buy the home. Requity covers closing costs, including land transfer tax and legal fees
• Step 5: Move in & save up. Rent your home while building your down payment every month
• Step 6: Buy your home. When you’re mortgage-ready, purchase the home at a guaranteed price

Whether you're incorporated, a sole proprietor, or a freelancer with growing income, Requity Homes offers a flexible, step-by-step path to homeownership.

Check your eligibility with Requity Homes and take the first step toward property ownership as a small business owner.