Supporting Canadian Business Owners and Entrepreneurs with Self-Employed Mortgages

Mortgage for Self-Employed Toronto and across Ontario

Self-Employed Mortgage

Self-employed Canadians are the heart and soul of our country providing an important source of employment growth. Taking advantage of the benefits of being self-employed sometimes harms business owners and entrepreneurs. Our mortgage brokers recognize this and are specialized in providing innovative mortgage solutions while leveraging private lender relationships. In addition to lower declared income, our mortgage lenders consider scenarios that include bad credit or poor credit, with fast 24-hour turnaround funding options (subject to terms and conditions).

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Mortgage Solutions in Toronto, GTA and across Ontario

Fast and Flexible, regardless of Credit


Self-employed business owners and entrepreneurs are the backbone of our country and have propelled Toronto and other cities across Ontario into one of the best places to live and work. At Square Capital Mortgage Brokerage, we understand people who are self-employed because we are also business owners and want to offer mortgage and financial solutions to fellow entrepreneurs. Bad credit and declared income are unexpected obstacles to self-employment and getting qualified for self-employed mortgages and other types of financing. In addition to banks, we are partners with private lenders who offer alternative mortgage options to help you with a new purchase, debt consolidation (that helps improve your bad credit score), and even renovations.

Private lenders usually charge a higher interest rate and fees, however the goal is to help self-employed borrowers repair their credit and move into a lower rate mortgage, quickly. Your self-employed mortgage will help prove your creditworthiness by showing your ability to repay debt on-time. 

Self-employed mortgages can be used for;

  • New Purchase – Live the Canadian dream or diversify your asset allocation by purchasing a new home, second home or rental property.
  • Debt Consolidation – Homeowners with bad credit can take advantage of their home’s equity and quickly have access to funds. Consolidate high interest debts and save money with a lower rate private mortgage while repairing bad credit.
  • Bad Credit Mortgage – Buy a new house and build your credit with consistent monthly payments, or payoff all high interest debts and start new with one of the best low interest borrowing options in the market.
  • Renovation – Even with bad credit or poor credit, homeowners may have to renovate their biggest investment. A bad credit mortgage leverages the home equity you have built into your home and lets you use it to pay for renovations that you need.

Be Prepared

Self-employed mortgage borrowers may be asked for documentation, depending on the lender. Some lenders, such as private lenders, may require less income verification but they rely on the borrower’s ability to repay the mortgage and the equity in your home. As always, based on the lender’s risk, rates may be higher and potentially additional fees.

  • Bank Records of Stated Income – As the reported net income on the tax return is lower than the stated income, some lenders might consider if you can provide bank statements containing the income received from your clients as a business or self-employed. It is also important to have a consistent flow of income on a monthly basis to improve the chances of being approved for a self-employed mortgage.
  • Save for a Bigger Down Payment – Lenders do their due diligence to ensure that the self-employed mortgage they lend is secured. If you can put down a bigger down payment towards your home, the lender will see you as a lower-risk borrower. The bigger the down payment you have at the beginning of the self-employed mortgage, the more equity you have in your home and the less likely you are to abandon it during a financial crisis. Having a bigger down payment also has the advantage of having a more affordable monthly mortgage payment.
  • Payoff Debt – The chance of getting approved for a self-employed mortgage is higher if you have minimal to no debt. Lenders will consider a self-employed applicant with low to no debt as a lower risk borrower as it will be easier for the borrower to make monthly self-employed mortgage payments.
  • Improve Your Credit Score – Your credit score plays a crucial role when it comes to applying for a self-employed mortgage. Having a higher credit score also increases your chances of qualifying for better interest rates as your application will be more attractive to a lender. Some of the ways you can increase your credit score include:
      • pay off credit card debts
      • make minimum payments and pay bills on time
      • do not go over your credit limit
      • ensure debts do not go into collections
      • do not apply for credit often
  • Record of Business or Self Employment – Maintaining a strong track record of your business or self-employment helps your business practice and is advantageous when applying for a self-employed mortgage. To prove the success of your business or self-employment, it is important to show that your income is consistent. Having a minimum of 2 years of records will increase your chances of approval for a self-employed mortgage.
  • Last 2 Years of Tax Records – Most self-employed mortgage lenders will ask for the last 2 years of tax return assessments along with other documents.

Documents Needed To Get a Self Employed Mortgage

As a self-employed mortgage applicant, providing the right information increases your chances of getting approved for a self-employed mortgage. If you can provide proof of consistent flow of income over a period of time, you might even qualify for a better interest rate or other types of mortgages. Even if you do not have a solid flow of income, it is possible to get approved for a self-employed mortgage. It is beneficial to provide documentation to confirm that you have been in business for or self-employed for at least two years and show two years’ worth of sound financial and credit management. Other documents a lender might require to process a self-employed mortgage include:

    • Business license or article of incorporation
    • Proof of principal ownership in the business
    • Financial statements for the business
    • Notice of Assessment, T4, and T1 General for the last 2 years to confirm your self-employed status
    • Bank statements for the last 6 months to help prove stated income
    • Agreements or contracts showing future/past income
    • Proof of taxes paid
    • Proof of down payment
    • Personal credit scores
    • Personal identification
    • Property details including property tax statement

Down Payment and Refinance Options

Most lenders require a minimum of 10% down payment to qualify for a self-employed mortgage. If the most recent yearly income is sound, you might qualify for up to 80% of the value of the property with no default insurance or up to 95% with default insurance for your self-employed mortgage. In addition, if you are a first time home buyer, you can also withdraw up to $35,000 from an RRSP as part of your down payment under the Home Buyer’s Plan. With good credit history and enough business income available, you can also refinance your house to access additional money to expand your business or meet other needs. You may be able to finance up to 80% of the appraised value of your home when refinancing using a self-employed mortgage.

Self-Employed Mortgage Alternatives

Banks usually have strict income verification processes when it comes to self-employed mortgages. If you cannot access a mortgage from a bank, a more viable option is a self-employed mortgage from a private lender. Private lenders are usually less strict with income verification and they may consider stated income instead of reported income. Private lenders are more likely to approve a self-employed mortgage, even with a low income and bad credit, because they consider debt-to-income calculations that add the deducted expenses back to the reported income in the application process. However, a self-employed mortgage from private lenders usually has a higher interest rate and other fees to compensate for the risk involved. Ultimately, it is important to ensure that all the business records are kept up to date and accurate before applying for a self-employed private mortgage as private lenders give more importance to them to validate the business income.

Contact Square Capital today to apply for a private self-employed mortgage. For more information, visit our Private Mortgages page.

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Contact us today to get a free quote. We will help you understand the current market conditions affecting the mortgage market! Prequalify without affecting your credit!

Questions about Self-Employed Mortgages

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Partial or zero payments for up to 12 months

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Other Mortgage Options

Home Equity Line of Credit (HELOC)

Access your home’s equity to use as much as you need and only pay the interest.

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Private Mortgage

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Reverse Mortgage

Canadian homeowners 55 and older can access up to 55% of their home’s value.

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Second Mortgage

An alternative option for homeowners to access their home’s value to consolidate high-interest debt, without paying penalties.

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Pros and Cons of a Self-Employed Mortgage

It is important to understand the advantages and disadvantages of a self-employed mortgage.

 Advantages of a Self-Employed Mortgage

  • Availability of Lenders
    • Due to the attractive returns on a self-employed mortgage, considering the risk involved, there are many private lenders in the market to approve a self-employed mortgage. Lenders know that the house prices are likely to appreciate over time, and they are willing to lend. Similar to banks, private lenders are confident that they can recover their money if borrowers default, by selling the property.
  • Diversified Investment
    • Despite the higher interest rates on a self-employed private mortgage, purchasing a house helps diversify investment for many families. Housing prices have been increasing steadily over the last few decades while providing a place for families to call home.

Disadvantages of a Self-Employed Mortgage

  • Higher Cost of Borrowing
      • Due to the challenges involved in proving the income for business owners or self-employed, lenders charge a higher interest rate and additional fees to approve a self-employed mortgage.
  • Difficulty Involved in Proper Documentation
      • It takes effort to organize documentation and maintain financial records. You might even have to hire a professional accountant to help you manage your finances.
  • Chances of Rejection
      • If the application is rejected for various reasons, it might impact your credit score and decreases your chances of applying for a self-employed mortgage in the near future.
  • Chances of Default
      • Due to the likelihood of income fluctuations as a business owner or self-employed, you might find it difficult to make repayments on a self-employed mortgage if your business does not go as planned or lose your contract as self-employed.

Despite the risks involved in borrowing a self-employed mortgage, with proper financial planning and discipline, buying a home can be a sensible investment with a self-employed mortgage in the long run. The discipline of maintaining proper documentation and money management is always a must for a business and a self-employed regardless of whether they apply for a self-employed mortgage.

Start Your Self-Employed Mortgage Pre-Approval

Due to the challenges involved in applying for a self-employed mortgage, Square Capital can help you get the best self-employed mortgage options for you. We can help you lock your rate and know exactly how much home you can afford. Start your self-employed mortgage online.

Questions? We’ll Put You On A Right Path!

Contact us today to get a free quote. We will help you understand the current market conditions affecting the mortgage market! Prequalify without affecting your credit!

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