Self-employed Canadians are key contributors to strong and vibrant communities and make up about 15% of Canada’s labor force. However, they may have difficulty qualifying for a mortgage as their incomes may vary or be less predictable.
In line with the National Housing Strategy’s mission to address the housing needs of all Canadians, Canada Mortgage and Housing Corporation (CMHC) is making a number of changes aimed at giving lenders more guidance and flexibility to help self-employed borrowers:
- Providing examples of factors that can be used to support the lender’s decision to lend to self-employed borrowers who have been operating their business for less than 24 months, or in the same line of work for less than 24 months such as acquiring an established business, sufficient cash reserves, predictable earnings and previous training and education; and
- Providing a broader range of documentation options to increase flexibility for satisfying income and employment requirements when qualifying self-employed borrowers such as the Notice of Assessment (NOA) accompanied by the T1 General, the CRA Proof of Income Statement and the Statement of Business or Professional Activities (T2125) to support an “add back” approach for grossing up income for sole proprietorship and partnerships.
These enhancements, which apply to both transactional and portfolio insurance, will take effect October 1, 2018.
As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.
“Self-employed Canadians represent a significant part of the Canadian workforce. These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates.”
Information on this release
Canada’s self-employed workforce are already an important part of the Canadian economy and it is growing, driven partly by an increase in the on-demand economy.
Housing is a vehicle for social inclusion and, through the lens of the National Housing Strategy, CMHC is increasing flexibility for self-employed Canadians.