Top 3 Questions Lenders Ask Self-Employed Applicants in Canada

You’re an entrepreneur. A business owner. You build your own success, manage your own time, and take calculated risks. But when it comes to getting a mortgage, it can often feel like the traditional banking system wasn’t built for you. The good news is, getting a mortgage when you're self-employed in Ontario is absolutely achievable—you just need the right strategy.

As a Mortgage Planner who specializes in finding creative solutions for tricky files, I’m pulling back the curtain to show you the exact questions lenders will ask. Being prepared with the right answers and documentation is the key to your success.

First, Why is a Self-Employed Mortgage Application Different?

Before we dive into the questions, it’s important to understand the lender’s perspective. For a salaried employee, income is predictable and easy to verify with a T4 slip. For a business owner, income can fluctuate, and legitimate business expenses and tax write-offs often reduce the income shown on paper. Lenders are looking for one thing: proof of stable and predictable income to ensure you can comfortably afford your payments.

Here are the top three questions they will ask to determine that.

Question #1: "How Do You Really Prove Your Income?"

This is the most critical question. Lenders want to see a two-year history to average out your income and confirm its stability. They aren't interested in a single great month; they want a clear pattern.

What Lenders Look For & The Documents You'll Need:

• A Two-Year Average: Lenders will typically average the income declared on Line 15000 of your tax returns for the past two full years.

• T1 General Tax Returns: Your complete personal tax filings for the last two years.

• Notices of Assessment (NOA): These documents from the CRA prove that your filings are up-to-date and show if you have any taxes owing.

• Business Financial Statements: If your business is incorporated, lenders will want to see these.

• Proof of No Tax Arrears: A statement showing your HST/GST and personal taxes are paid and current.

The "Write-Off" Problem: As a smart business owner, you write off expenses to lower your taxable income. However, this can work against you on a mortgage application, as the lower taxable income is what the bank uses. This is one of the primary reasons self-employed files can be "tricky."

Question #2: "How Healthy and Established is Your Business?"

Lenders need to see that your business isn't a brand-new venture but an established operation with a track record of success.

What Lenders Look For:

• Minimum Two Years in Business: This is the industry standard. Most lenders will not consider your application until you have at least two full years of tax history as a self-employed individual.

• Consistent or Growing Revenue: They will review your financial statements to see if your business revenues are stable or ideally, on an upward trend. A sharp decline in revenue can be a major red flag.

• Industry Stability: Lenders will also consider the industry you operate in. Is it a stable field with long-term prospects?

Question #3: "How Strong is Your Down Payment and Credit?"

Because your income stream is viewed as less predictable than a salaried employee's, lenders place extra emphasis on your financial discipline in other areas.

• Your Down Payment: While the minimums still apply, a larger down payment (e.g., 10-20% or more) significantly strengthens your application. It shows financial capacity and reduces the lender's risk.

• Your Credit History: A strong credit score and a clean history of paying your debts on time are non-negotiable. It proves you are a responsible borrower, which gives lenders the confidence they need.

Frequently Asked Questions (FAQ)

1. Is it difficult to switch lenders at renewal? Not at all. When you work with a mortgage professional, the process is simple and streamlined. We handle the paperwork and communication to make the switch seamless.

2. Will shopping for a new mortgage hurt my credit score? When done correctly, no. A single credit inquiry from a mortgage professional allows us to check with multiple lenders. This is treated as a single "hard inquiry" and has a minimal, temporary impact on your score, unlike applying to multiple lenders yourself over several weeks.

3. What’s the difference between renewing and refinancing? A renewal is simply renewing your existing mortgage balance with a new term and rate (either with your current lender or a new one). A refinance involves changing the terms of your mortgage, often by borrowing more than you currently owe to access equity or consolidate debt. We can discuss which is right for you.

The Solution for Business Owners: Stated Income Mortgages

What if your tax returns don't reflect your true cash flow due to write-offs? This is where working with a mortgage professional becomes essential. I work with specialized lenders who offer "Stated Income" mortgage programs.

These programs are designed specifically for self-employed Canadians. Instead of relying solely on your tax returns, these lenders use other methods to verify your income and cash flow, allowing us to present a more realistic picture of what you can afford. This is a key way we unlock mortgage options the banks don't advertise.

Get a Strategy for Your Success

Getting a mortgage when self-employed isn't harder—it's just different. It requires a strategic approach. My job is to package your story and your numbers in a way the right lender will understand and approve.

Are you a business owner in Whitby or across Ontario ready to buy or refinance? Don't let the paperwork intimidate you. Let's build a strategy that works.

Let's Build the Strategy That Gets You Approved.

You're an expert at running your business. I'm an expert at packaging your success for lenders who understand entrepreneurship.

In a complimentary 15-minute strategy call, we'll go beyond the tax returns and focus on your true cash flow.

Let's unlock the mortgage options built for business owners like you. Find a time on my calendar below.