Self-Employed Mortgage Qualification: T1, T2, and Bank-Statement Paths
If you’re self-employed, you’ve probably heard that getting a mortgage is harder. It’s not harder, it’s just different. The trick is knowing which income path to use, because the right one can be the difference between qualifying for the bank’s best rate and getting declined. Here are the three main routes.
Path 1: The two-year average (T1 General)
The most common A-lender approach is a two-year average of your income reported on your personal tax returns, specifically Line 15000 of your T1 General, backed by your Notices of Assessment. This works well if you show healthy personal income and don’t write off too aggressively. It’s the cleanest path to the lowest rates.
Path 2: Corporate income (T2 financials)
If you’re incorporated and leave money in the company, some lenders will look at your corporate financial statements and use a two-year average of the business’s net income after tax. This is powerful for owners whose personal income looks small on paper but whose company is genuinely profitable.
Path 3: Bank-statement and stated-income programs
When your tax returns don’t tell the full story, B lenders offer bank-statement programs that qualify you on your actual deposits over the last 12 months rather than your taxable income. Rates are slightly higher and there’s usually a lender fee, but for a lot of business owners this is the path that actually reflects what they really earn.
Picking the right one
The best path depends on how your income is structured and how aggressively you write off. That’s exactly the kind of thing worth a 20-minute conversation before you ever apply, because choosing wrong can cost you a full rate tier or a decline you didn’t need.
Self-employed and not sure where you stand?
Send me your last two years of numbers and I’ll tell you which path gets you the most mortgage, and which lenders to target.
Tyler Salmon, Mortgage Agent Level 2 (Licence #M21003803) · Tango Ontario (FSRA #13691)
