If you’re self-employed and have applied for a mortgage through your bank, you’ve likely encountered some challenges. Banks employ “A” lending guidelines which means that they have to have two years tax returns and NOA’s from you and they can only use the net income after all expenses.

This poses 2 challenges. One is you must been self-employed for 2 1/2 to three years before you’re going to have two full years of tax income showing on your tax returns. The other challenge is that self-employed borrowers have a lot of write-offs.  They could be, employment use of a home business, employment use of a car, there’s depreciation, amortization, amongst others.  These write down the income low and often not enough to qualify for a mortgage that you’re looking for.

Thankfully there’s “B” lending. Some Banks offer “B” lending. Trust companies, credit unions do it as well.  With “B” lending we can use a self declared letter for self-employed people. It does have to be backed up with 12 months business bank statements confirming that the business does have sufficient gross revenues to support that level of income. With a “B” Lender we can often get a self-employed borrower the amount of mortgage that they’re looking for to satisfy their needs.

If you need more advice on self-employed borrowing or anything to do with mortgages, feel free to give me a call.