But when it comes to buying or refinancing a home, being self-employed can feel like an uphill battle. Conventional lenders often want standard proof of income: pay stubs, regular salary, and neat T4s. That doesn’t always match well with the reality of freelancing, contract work, or running your own business.
Fortunately, alternatives exist — and for many self-employed Canadians, they can open the door to homeownership.
Why Traditional Mortgages Often Don’t Work for Self-Employed People
Traditional (or “prime”) mortgage lenders typically expect:
2–3 years of consistent, stable income — often verified through T4s or tax documents.
A “typical” employment history (i.e., regular salary, employer, etc.)
For many entrepreneurs and small-business owners, that’s not representative of their financial reality. Business deductions, volatile income flows, or reinvestments can significantly reduce “net income” on paper — even if your business is doing well.
Because of this, you might be perfectly capable of managing a mortgage — but traditional lenders, applying rigid income-verification rules, may not see it that way.
Enter Self-Employed Mortgages: A Smarter Fit for Self-Starters
Self-employed mortgages are designed specifically for people with non-traditional income: entrepreneurs, freelancers, consultants, and business owners. These mortgages — offered by “alternative” or “private” lenders — often look at your overall financial health, business strength, and home equity instead of just the last two years of tax returns.
For example, one lender emphasizes that they don’t need tax returns, NOAs (Notice of Assessment), or business financials for many self-employed borrowers — they simply lend “based on equity, not paperwork.”
This flexibility makes self-employed mortgages a real option for people who:
Have inconsistent income streams.
Are new to being self-employed.
Run a business where earnings are reinvested rather than taken as “salary.”
Were declined by traditional banks.
What Lenders Typically Look For: Documentation & Stability (Even If It’s Not a Pay Stub)
Depending on the lender and their program, you may need to provide a mix of the following:
Notices of Assessment (NOAs) and personal tax returns (T1s) from the past 2–3 years.
Business financial statements (if incorporated), or profit/loss statements.
Bank statements (personal or business) showing consistent deposits or revenue history.
Proof of business registration, such as articles of incorporation or GST/HST registration (for incorporated businesses).
A reasonable credit score — or a private lender willing to work with credit that might not be perfect.
A healthy down payment or existing home equity (especially if income documentation is limited).
In short: self-employed mortgages tend to replace rigid income verification with a more holistic view of your financial situation: business viability, home equity, credit history, and cash flow consistency.
What to Watch Out For — And How to Improve Your Chances
Getting approved doesn’t mean you should skip diligence. Here are some of the common challenges, and how to address them:
Fluctuating or low “on-paper” income. Self-employed incomes often vary year to year, especially if you write off expenses or reinvest profits. In those cases, your net income on tax documents might look low — even if your business is healthy.
Tip: Keep meticulous financial records. Separate personal and business accounts; avoid commingling; maintain clear invoices; and consider paying yourself a consistent “salary” or dividends if possible.
Perception of risk. Because self-employment can feel unstable to lenders, some may charge higher interest rates or require larger down payments.
Tip: Work on building a strong credit history, maintain lower debt-to-income ratios, and aim for a 20%+ down payment (or enough home equity) when possible.
Paperwork burden. Even if you’re using a self-employed mortgage option, you may still need several types of documentation (tax returns, business statements, bank statements, proof of business registration).
Tip: Start gathering documents early. If possible, work with an accountant or a mortgage broker experienced in self-employed mortgages — they can help make sure nothing essential is missing.
Why Some Lenders Are Better for Self-Employed Borrowers: The Equity-Focused Approach
Some private or alternative lenders — like Lendworth — market specifically to self-employed borrowers. Their underwriting doesn’t hinge solely on “income declared on paper.” Instead, they look at:
The equity in your home (how much of the property you already own).
The property’s appraised value.
Your overall exit strategy (how you’ll repay the loan).
Realistic assessments of your business cash flow or financial position.
For those who don’t fit neatly into the “traditional income” box — such as freelancers, consultants, or reinvesting business owners — this equity-based model may be the smartest path to homeownership or refinancing.
Final Thoughts: Being Self-Employed Doesn’t Have to Stand in the Way of Your Homeownership Dreams
Yes — getting a mortgage as a self-employed person can be more involved than falling in line with the typical salaried-employee model. But with the right documents, a clear financial picture, and the right type of lender, it’s absolutely possible.
The key is to be proactive: keep clean finances, organize documentation early, and learn which kinds of lenders or mortgage products truly understand the realities of running your own business.
If you’re in Ontario — or elsewhere in Canada — and feel discouraged by the traditional mortgage roadblocks, consider a lender or broker who specializes in self-employed mortgages. For many business owners, this is the path that finally leads to keys in hand.