Mortgages for the Self Employed

A lot of self employed people still think they can’t qualify for mortgages.  Because Business For Self (BFS) clients usually have a lot of tax write offs, their Notice of Assessments (NOA) show a lower income than the salaried or hourly paid worker.

CMHC, Genworth and AIG, the big 3 mortgage insurers, recognize this and have eased the constraints on BFS clients.  Each insurer has its own nuances but, generally speaking, lenders will lend up to 95% on purchases and 90% on refinances to BFS clients.  To get purchase financing with only 5% down, you’ll need a beacon score of 700 or better.  For 90% financing on a purchase, 650 is the number to hit.  The lower your beacon score, the less financing available.  Also required is proof of 2 years of self employment and proof that income taxes are paid and up to date.

Fully discounted rates are available with amortizations of up to 40 years.  Insurance premiums are a bit higher than salaried or hourly paid workers, however.  Premiums on 95% financing are 6.0%, on 90% financing they are 4.75% and on 85% financing they are 2.9%.  These premiums are added to the mortgage amount and, therefore, can be easily managed.

Guest post by Ken Wiebe, Mortgage Broker. Click here to contact Ken.

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