|
|
The premise of self-employed
mortgage programs is that the
lender looks at what you state
you make. One of the primary requirements
is that the income stated must
be reasonable based on the size
and type of business. The lender
will look at the likelihood of
the applicant’s ability to
earn what is stated on the application
and the lender will want to feel
confident that the applicant is
able to adequately service the
mortgage debt.
For mortgage lenders, self-employed
individuals fall under a special
category. Unlike salaried employees,
the income for self-employed people
fluctuates depending on the stability
of their business. Secondly, self-employed
individuals have the ability to
write-off more expenses than salaried
employees. These write-offs may
not truly reflect their earning
ability.
Recognizing the growing number
of self-employed individuals in
Canada, many lenders have designed
programs to tap this market by
offering what they call No Income
Qualifier (NIQ) programs. These
mortgages do not require verification
of income. All the borrower needs
to do is to provide a copy of
their Notice of Assessment to
prove that they do not owe the
government back taxes.
|
|
|
|
|
In the past, most NIQ programs
required a down payment
of between 25% to 35%. It
is now possible, with mortgage
insurance from Genworth
(formerly GE Mortgage) and
AIG, to borrow with a down
payment as low as 5%. Genworth
/ AIG is looking for businesspeople
who have good credit (minimum
credit score of 700) and
been in the business for
at least 3 years.
If the borrower has less
than perfect credit, there
are specialty lenders that
will consider self-employed
individuals on a high-ratio
basis.
Of course, if the businessperson
can provide full documentation,
he/she can qualify under
traditional lending programs.
These mortgages can be either
conventional or high ratio.
For a conventional mortgage
(i.e. mortgages where the
borrower has at least 20%
down payment), the rules
for qualification will vary
from lender to lender. On
high ratio mortgages, the
lender will have to comply
with the Canadian Mortgage
and Housing Corporations
(CMHC) , Genworth, AIG rules.
click
here to apply 
|
|
|
|
|
