Self-employed in Edmonton? You already know banks make mortgages harder for business owners, contractors, and freelancers. Your real income and the income on your tax return are often two very different numbers — and banks tend to believe the tax return. Anh Lang of TMG Mortgages (780-446-1271) works with stated-income and bank-statement programs designed for exactly your situation.
Why Banks Make It Hard for the Self-Employed
Banks like simple, predictable pay stubs. Self-employed income looks messy to them: it varies year to year, gets reduced by legitimate business write-offs, and may come from multiple sources. A profitable business can show surprisingly little taxable income after expenses — which is great at tax time and terrible at mortgage time. Alternative lenders understand this gap and have programs built to bridge it.
Stated-Income and Bank-Statement Programs
Stated-income programs let you declare your income (supported by your business’s activity and bank deposits) rather than relying solely on your Notice of Assessment line items. Bank-statement programs use 6–12 months of business or personal bank statements to establish your real cash flow. Both exist because traditional income verification fails so many genuinely creditworthy business owners — and both generally require a larger down payment and solid credit to balance the lender’s risk.
Two Years of Tax Filings and NOAs: What Lenders Want to See
Most lenders want to see at least two years of self-employment history, documented through personal tax returns (T1 Generals) and Notices of Assessment (NOAs). Two years shows your income is sustainable, not a one-time spike. If you’ve been self-employed for less than two years, options narrow — but don’t assume it’s impossible. Talk to Anh about your specific timeline.
How Lenders Average Your Income
With two years of filings, lenders typically average your reported income across both years. If your income is rising, some lenders will use the most recent year; if it’s falling, they’ll usually use the lower average — declining income makes lenders cautious. This is why the timing of your application, and which lender sees it, can change the outcome. A broker who knows each lender’s approach is a real advantage here.
Sole Proprietors vs. Corporations and Dividends
Sole proprietors report business income directly on their personal return, so lenders see gross and net business income on the T1. Incorporated owners face an extra layer: lenders look at your salary, dividends, and sometimes retained earnings in the corporation. Some lenders will add back certain write-offs (like depreciation or a portion of vehicle expenses) to reflect your true cash flow — but policies differ widely, which is exactly why shopping lenders matters.
Documents Checklist for Self-Employed Borrowers
- Two years of personal tax returns (T1 Generals) and Notices of Assessment
- Business financial statements, if available
- Business license or articles of incorporation proving self-employment history
- 6–12 months of business (and personal) bank statements
- Contracts or client invoices showing ongoing work, for contractors and freelancers
- Proof of down payment and ID, as with any application
Tips to Qualify for Better Rates
- Keep clean books. Organized financials make every lender’s job easier.
- Don’t starve your reported income right before applying — aggressive write-offs in the two qualifying years can shrink your approved amount.
- Build your down payment. More down opens more programs and better terms.
- Keep credit spotless. Strong credit offsets income complexity.
- Talk to Anh early — ideally before tax season, so your filings support your mortgage goals.
Frequently Asked Questions
Can I get a mortgage if I’ve been self-employed less than two years?
It’s harder, but not always impossible — especially with a strong down payment, good credit, and prior experience in the same industry. Anh can tell you honestly where you stand.
Do I need to prove my income with tax returns?
Most programs use two years of returns and NOAs. Stated-income and bank-statement programs offer alternatives when your tax-reported income understates your real earnings — usually with more down required.
Will I pay a higher rate as a self-employed borrower?
Not necessarily — many self-employed borrowers with strong credit and good documentation get standard terms. Alternative programs carry higher rates, which is why documenting income well pays off.
I’m a contractor with one main client. Does that count?
Often yes — especially with contracts showing ongoing work. Lenders may treat long-term contractors similarly to employees in some cases. Bring your contracts and let’s look.
Should I change how I file taxes before applying?
Talk to Anh before your next filing if a mortgage is on the horizon — small timing and reporting choices can meaningfully change what you qualify for. (And always follow your accountant’s advice on compliance.)
Apply Now — Anh Lang (TMG Mortgages, 780-446-1271) will review your application and call you back.
Anh Lang — TMG Mortgages — 780-446-1271 — price@ourhouseprice.ca — Part of the Our House Price Real Estate Team