When Amanda and Brad relocated to Sault Ste. Marie, Ontario, they were just getting started on their own entrepreneurship journey starting
Thrive Tours. They experienced first hand some of the challenges of securing a mortgage as new business owners. While they knew they could afford a mortgage, they had limited options to choose from.
Let's say you have a down payment saved up, can afford a mortgage in your ideal home shopping budget, and have a credit score that's above 680. As an employee, as long as you have more than 6 months of work history and are not on probation, there's a high likelihood you'll be able to find a mortgage with a traditional bank. As a business owner, most lenders will require you to have at least 2 years of operating history. To complicate matters, most lenders will usually use your taxable income (line 150 of your T1 tax return) from the past 2 or 3 years to determine the mortgage amount you can qualify for. This could lower the amount you can borrow for a home purchase, since as a small business owner, you are motivated to deduct many expenses from your gross income to minimize taxes payable.
Check out
this article for a detailed overview of different lenders’ policy on self-employed mortgage requirements.