Self Employed Mortgage Ontario: How to Get Approved When Banks Say No (2025)
Looking for a self employed mortgage in Ontario? The bank said no. Maybe your income is “too complicated” because you’re self-employed. Maybe your credit took a hit during a rough patch. Whatever the reason, you’ve been told you don’t qualify. Here’s the truth: banks say no all the time to people who absolutely can get approved—they just need the right lender and the right broker.
Why Banks Say No to Self Employed Mortgage Applicants in Ontario
Big banks have rigid qualification boxes. If you don’t fit perfectly inside them, you’re declined—regardless of your actual ability to pay. Their automated systems can’t handle nuance.
But here’s what they won’t tell you: there are over 50 lenders in Canada, many of whom specialize in exactly the situations banks reject. As a mortgage broker serving Milton and the GTA, I work with these lenders every day. My job is to find the one that says yes to your situation.
Self Employed Mortgage Ontario: The Real Story
If you’re self-employed, you know the frustration. You run a successful business, earn good money, and pay your bills on time. But when you apply for a mortgage, suddenly your income “doesn’t count” the way employment income does.
The Problem with Traditional Lenders
Banks typically want to see:
- 2 years of Notice of Assessments (NOAs)
- Your net income (after business deductions)
- Consistent income year over year
Here’s the catch: smart business owners minimize taxable income through legitimate deductions. You might gross $150,000 but show $60,000 on your NOA. The bank sees $60,000 and says you can’t afford the mortgage—even though your actual cash flow tells a completely different story.
Solutions for Self Employed Mortgage Applicants in Ontario
I work with lenders who understand self-employment. Depending on your situation, we can use:
Stated Income Programs
Some lenders allow you to “state” your income based on what’s reasonable for your industry—without requiring traditional proof. You’ll need a strong down payment (usually 20%+) and good credit, but this opens doors that traditional lending closes.
Bank Statement Programs
Rather than tax returns, some lenders will review 12-24 months of business bank statements to assess your real cash flow. This shows your actual deposits and income patterns.
Add-Back Programs
Certain lenders will “add back” specific business deductions (like vehicle expenses, home office, depreciation) to your declared income, giving a more accurate picture of your earnings.
Business-for-Self (BFS) Lenders
Several lenders have programs specifically designed for self-employed Canadians. They speak your language and evaluate your application with self-employment realities in mind. Learn more about CMHC mortgage insurance options that may apply.
What You’ll Need for a Self Employed Mortgage in Ontario
While requirements vary by lender, here’s what typically helps your application:
| Requirement | Details |
|---|---|
| Time in business | 2+ years (some lenders accept 1 year) |
| Business documentation | License or articles of incorporation |
| Bank statements | Recent business and personal statements |
| Tax documents | Notice of Assessments (even if income is low) |
| Financial statements | Accountant-prepared (if available) |
| Down payment | 10-20%+ improves options significantly |
Credit Challenges: Your Past Doesn’t Define Your Future
Life happens. Divorce, job loss, medical emergencies, business failures—credit scores take hits for reasons that have nothing to do with your character or your ability to pay going forward.
If your credit is less than perfect, you still have options for a self employed mortgage in Ontario. The key is finding the right lender for your specific situation.
Understanding Credit Score Requirements
Different lenders have different thresholds:
| Lender Type | Credit Score Requirement |
|---|---|
| Prime lenders (big banks) | Usually 680+ credit score |
| Alternative lenders | Work with scores from 550-680 |
| Private lenders | Focus more on equity than credit score |
A lower credit score doesn’t mean no mortgage—it means different options with potentially different rates and terms.
Common Credit Situations I Help With
Previous Bankruptcy or Consumer Proposal
Yes, you can get a mortgage after bankruptcy. Once discharged for 2+ years with re-established credit, many lenders will consider you. Some alternative lenders work with more recent discharges.
Collections and Past-Due Accounts
Outstanding collections need to be addressed, but they don’t automatically disqualify you. We’ll strategize which to pay off and how to present your application in the best light.
Limited Credit History
New to Canada? Young adult with thin credit file? Some lenders have programs for applicants with limited credit history, using alternative factors to assess risk.
Recent Late Payments
A few late payments don’t necessarily sink your application—context matters. If there’s a reasonable explanation and recent history is clean, many lenders will look past it.
High Debt Ratios
Carrying too much debt relative to income? We might structure your mortgage to consolidate and eliminate high-interest debt, actually improving your overall financial position. Learn more about mortgage refinancing options for debt consolidation.
The Equity Advantage for Self Employed Mortgage Ontario Applicants
Here’s something important: the more equity (down payment) you have, the more flexibility you have with credit. A buyer with 25% down and a 600 credit score has more options than someone with 5% down and a 650 score.
If your credit is challenged, a larger down payment can open doors that would otherwise be closed.
Alternative and Private Lending: What You Need to Know
When prime lenders say no, alternative and private lenders often say yes. But it’s important to understand what you’re getting into.
Alternative Lenders
- Rates typically 0.5-2% higher than prime
- Often require 20% down payment
- May have lender fees (added to mortgage)
- Still offer competitive terms and reasonable rates
- Good option for self-employed or credit-challenged borrowers
Private Lenders
- Rates typically 7-12% (higher than banks)
- Focus primarily on property equity, not income/credit
- Usually 1-2 year terms
- Higher fees
- Best used as short-term solution while rebuilding credit
My approach: I always try to find you the best possible option. Private lending is a tool, not a first choice. If alternative lending works, we go there. If private is necessary, we use it strategically with a plan to move to better rates as your situation improves.
Why Work with a Broker for Your Self Employed Mortgage in Ontario
If you’re self-employed or have credit challenges, working with a mortgage broker isn’t just helpful—it’s essential. Here’s why:
- Access to specialized lenders – Many lenders who work with non-traditional borrowers don’t deal directly with the public
- Know which lender fits your situation – I know which lenders are flexible on self-employment income, which overlook certain credit issues, which offer the best rates for your scenario
- Present your application strategically – How your application is presented matters. I know how to highlight strengths and address concerns
- Save you from hard credit hits – Instead of applying to multiple lenders yourself (each hitting your credit), I submit to the right lender the first time
- No cost to you – My services are paid by the lender, not you
Steps to Improve Your Self Employed Mortgage Ontario Approval Chances
While we work on finding you a lender, here are things you can do to strengthen your position:
For Self-Employed Borrowers
- Keep business and personal finances separate
- Maintain organized financial records
- Consider reporting slightly higher income next tax year if you’re planning to buy
- Save for a larger down payment
- Keep business bank statements showing consistent deposits
For Credit-Challenged Borrowers
- Get a copy of your credit report and review for errors
- Pay all current bills on time—recent history matters most
- Pay down credit card balances (keep under 30% of limit)
- Don’t close old credit accounts (length of history helps)
- Avoid applying for new credit before your mortgage application
- Save for a larger down payment to offset credit concerns
Frequently Asked Questions About Self Employed Mortgages in Ontario
How long do I need to be self-employed to qualify?
Most lenders want 2 years, but some will work with 1 year of self-employment history. If you recently transitioned from employment to self-employment in the same field, that history can sometimes help.
Will I pay a higher interest rate?
It depends. Self-employed borrowers with strong documentation and good credit often qualify for the same rates as employed borrowers. If we need to use alternative lenders, rates may be slightly higher. I always find you the lowest rate available for your situation.
How long after bankruptcy can I get a mortgage?
Prime lenders typically want 2+ years after discharge with re-established credit. Alternative lenders may work with you sooner. The key factors are: time since discharge, re-established credit, and down payment amount.
Should I fix my credit before applying or apply now?
Let’s talk first. Sometimes waiting makes sense; other times, you can qualify now and refinance to a better rate later as your credit improves. The right strategy depends on your specific timeline, goals, and current credit situation. Contact me for a free assessment.
Can I combine self-employment income with employment income?
Yes! If you have a part-time job plus self-employment income, or your spouse is employed while you’re self-employed, we can often combine income sources to strengthen your application.
The Bank Said No. Let’s Find Who Says Yes to Your Self Employed Mortgage in Ontario.
A “no” from one lender doesn’t mean no from all lenders. It just means you need someone who knows where to look.
I specialize in finding mortgage solutions for self-employed borrowers and clients with credit challenges. Every situation is different, and I’ll give you honest advice about your options—even if that advice is to wait and work on your situation before applying.
Let’s have a conversation about your situation. No judgment, no pressure—just straight answers about what’s possible.
Serving self-employed professionals and business owners throughout Milton, Oakville, Burlington, Mississauga, Brampton, and the GTA.
Carl Zuzart is a licensed mortgage broker (License #M25001564) with Pineapple Mortgages, serving the Greater Toronto Area. Have questions? Call 289-298-2989 or email mortgages@zuzart.ca.
