CMHC Self-Employed

Facilitating access to mortgage loan insurance for business owners.

Approximately 15% of the Canadian labour force is self-employed and may have difficulty accessing financing to buy a home, since their income sources may vary or be less predictable than those of employed borrowers.

CMHC provides enhanced flexibility for satisfying income and employment requirements for all self-employed borrowers at no additional cost. This is in line with the National Housing Strategy commitment to address the housing needs of Canadians along the housing continuum.

Download our one page CMHC Self-Employed program fact sheet (PDF).

FEATURES

PROGRAM-SPECIFIC CRITERIA

DOCUMENTATION TO SUPPORT LENGTH OF BUSINESS OPERATION

DOCUMENTATION TO SUPPORT INCOME

ENHANCEMENTS FOR RECENTLY SELF-EMPLOYED

ELIGIBILITY REQUIREMENTS APPLICABLE TO ALL PROGRAMS

Eligible borrowers

Individuals who are Canadian citizens, permanent residents of Canada, or non-permanent residents who are legally authorized to work in Canada.

Loan-to-value (LTV) ratios

For homeowner loans (owner-occupied properties), the loan-to-value ratio for 1 – 2 units is up to 95% LTV. For 3 – 4 units, the ratio is up to 90% LTV.

For small rental loans (non-owner occupied), the loan-to-value ratio for 2 – 4 units is up to 80% LTV.

Minimum equity requirements

For homeowner loans, the minimum equity requirement for 1 – 2 units is 5% of the first $500,000 of lending value and 10% of the remainder of the lending value. For 3 – 4 units, the minimum equity requirement is 10%.

For small rental loans, the minimum equity requirement is 20%.

Purchase price / lending value, amortization and location

For both homeowner and small rental loans, the maximum purchase price / lending value or as-improved property value must be below $1,000,000.

For homeowner loans, CMHC-insured financing is available for one property per borrower/co-borrower at any given time.

The maximum amortization period is 25 years.

The property must be located in Canada and must be suitable and available for full-time, year-round occupancy. The property must also have year-round access (via a vehicular bridge or ferry if it is on an island).

Down payments

The down payment can come from sources such as savings, the sale of a property, or a non-repayable financial gift from a relative.

Rental income

Whether the property is owner occupied or non-owner occupied, subject to an MLI application or not, we offer different approaches to rental income for qualification purposes.

Find out more about the approach(es) that can be used to calculate rental income and the inputs to consider when calculating the debt service ratios.

Creditworthiness

At least one borrower (or guarantor) must have a minimum credit score of 680. CMHC may consider alternative methods of establishing creditworthiness for borrowers without a credit history.

Debt service

The maximum threshold is a gross debt service (GDS) ratio of 35% and a total debt service (TDS) ratio of 42%.

Interest rates

The GDS and TDS ratios must be calculated using an interest rate that is either the contract interest rate or the Bank of Canada’s 5-year conventional mortgage interest rate, whichever is greater.

Advancing options

Single advances include improvement costs less than or equal to 10% of the as-improved value.

Progress advances include new construction financing or improvement costs greater than 10% of the as-improved value. With Full Service, CMHC validates up to 4 consecutive advances at no cost. For Basic Service, the Lender validates advances without pre-approval from CMHC.

Non-permanent residents (homeowner loans only)

Non-permanent residents must be legally authorized to work in Canada (with a work permit). Mortgage loan insurance is only available for non-permanent residents for homeowner loans for 1-unit property, owner occupied, up to 90% LTV.

Non-permanent residents are not eligible for alternative methods of establishing creditworthiness. In cases where a credit report is not available, a letter of reference from the borrower’s financial institution in their country of origin may be considered.