CMHC is making changes to assist self employed home buyers. The announcement came on July 19, 2018. CMHC noted that those who are with self employment are a large part of the Canadian workforce. The changes will help those who are self employed obtain mortgage loan insurance easier. With that, they would also have access to the best mortgage rates in Ottawa. The changes took effect October 1, 2018.
Self employed individuals typically try to write-off as many expenses as possible to minimize the income tax paid. Unfortunately when it comes to applying for a mortgage this can work against the debt to income ratio. Typically CMHC wants to see a two year average of your taxable annual income. This income is known as your line 150 from your Notice of Assessments. CMHC will now make considerations for those who have previous industry experience (or training/education). Also, who can show that they have reasonable cash on hand and who’s future earnings will be predictable. CMHC will also take into consideration those who acquire an existing business.
An example of this is someone who has worked for an employer for many years and is now switching to self employment in the same industry. This person now has a contract with their previous employer for work. Plus, they have the as well as the ability to pick up other contracts. No longer would this client need to seek alternative lending mortgages until they establishes two years of tenure with self employment.
Another change is that CMHC can now look to the Statement of Business Activity from a sole proprietor to assist in supporting the add back of certain write-offs. This can assist in boosting the gross income.
It’s great to see that in an environment of tightening mortgage rules, there is some flexibility for self employed home buyers.
Andrew Thake is a seasoned mortgage broker with over 15 years of industry experience. He’s assisted more than 2,200 clients in finding their ideal mortgage solutions. Recognized for his excellence, Andrew has received high honours and awards, including the National Rookie of the Year from TD Canada Trust and recognition as a Top 10 Ottawa Mortgage Broker in 2023. He has also been inducted into the Hall of Fame at Dominion Lending Centres and has consistently received their Platinum Award during his tenure as a mortgage broker.
Andrew’s dedication lies in serving his clients and prioritizing their needs with an empathetic approach. Throughout the application process, he provides tailored, informed, and efficient services to ensure the best mortgage solutions for his client’s unique circumstances. The best part of Andrew’s job is when he gets to see the joy on his clients’ faces following their mortgage approval.
