Being self-employed can be rewarding but it also presents unique challenges when it comes to qualifying for a mortgage. Unlike working for a traditional employer, the income of a self-employed person is often more variable, which makes it harder to demonstrate a steady, reliable income to a lender.
But that doesn’t mean it’s impossible to get a mortgage. Here are some strategies self-employed Canadians can use to increase their chances of qualifying for a mortgage:
- Track Your Income and Expenses:
As a self-employed person, it’s important to keep accurate records of your income and expenses. This will help the lender see that you have a consistent income and that you’re managing your finances responsibly.
- Have a Strong Credit Score:
Your credit score is a critical factor when it comes to qualifying for a mortgage. Lenders want to see that you have a good credit history and that you’re managing your finances responsibly. If you have a low credit score, work to improve it before applying for a mortgage.
- Have a Large Down Payment:
Having a large down payment can help you qualify for a mortgage. The more money you put down, the lower the risk to the lender and the better your chances of qualifying.
- Get a Co-Signer:
If you’re unable to qualify on your own, you can try getting a co-signer. A co-signer is someone who agrees to be responsible for the loan if you default. This can increase your chances of qualifying, but it also means that the co-signer is taking on a lot of risk.
- Consider Alternative Lenders:
If you’re having difficulty qualifying for a mortgage from a traditional lender, you may want to consider an alternative lender. Alternative lenders often have more flexible criteria for qualification and may be more willing to work with you.
Being self-employed doesn’t mean you can’t get a mortgage. By following these strategies and working with a qualified mortgage professional, you can increase your chances of getting approved.