For many Canadians, homeownership is a key financial milestone. However, for self-employed individuals, securing a mortgage comes with additional challenges compared to salaried employees.
While traditional employees can provide T4 slips as proof of income, self-employed Canadians often face fluctuating earnings, business expenses, and non-traditional income documentation, which can make mortgage approval more difficult.
According to Statistics Canada, over 15% of the workforce is self-employed, with the number rising due to the growth of freelancing, startups, and small businesses. As a result, banks and lenders have adapted their mortgage products to cater to this growing group.
At Sandhu & Sran Mortgages, we specialize in helping self-employed professionals in Surrey, Abbotsford, and Fraser Valley secure competitive mortgage rates by navigating complex lender requirements and finding the best solutions.
Understanding Mortgage Rates for Self-Employed Canadians
1. How Bank of Canada’s Interest Rate Policy Affects Mortgage Rates
As of January 29, 2025, the Bank of Canada’s key interest rate stands at 3.00%, following multiple adjustments in 2024.
This interest rate influences mortgage rates, affecting both fixed-rate and variable-rate mortgages.
- Fixed Mortgage Rates: Tied to government bond yields, these rates have remained stable but are expected to decrease slightly if the economy slows.
- Variable Mortgage Rates: These fluctuate based on the Bank of Canada’s rate decisions and could see adjustments in late 2025 depending on inflation and economic trends.
2. How Mortgage Lenders View Self-Employed Borrowers
Traditional lenders prefer stable and predictable income. Since self-employed individuals often report lower taxable income due to business deductions, they may be seen as higher risk.
To compensate for this perceived risk, lenders may:
- Require larger down payments
- Demand more extensive documentation
- Offer slightly higher interest rates compared to salaried employees
However, working with a mortgage broker like Sandhu & Sran Mortgages can help navigate these challenges by identifying lenders who specialize in self-employed mortgages.
How Self-Employed Canadians Can Secure the Best Mortgage Rates
1. Strengthen Income Documentation
Since self-employed applicants do not have T4 slips, lenders require alternative documents such as:
- Two years of personal tax returns (T1 Generals & Notices of Assessment)
- Business financial statements (if incorporated)
- Business bank statements (6-12 months) showing steady revenue
- Proof of business registration or incorporation
Some lenders accept stated income mortgages, where income is estimated based on industry averages. However, these often come with higher rates.
2. Save for a Larger Down Payment
A higher down payment reduces lender risk and increases approval chances.
- Traditional lenders require 10-20% down for self-employed borrowers.
- Alternative lenders may accept 10% down but with higher interest rates.
- A 20%+ down payment eliminates CMHC insurance, saving thousands in fees.
3. Improve Your Credit Score
A strong credit score helps secure the best mortgage rates. Lenders typically prefer:
- Credit scores above 680 for prime mortgage products
- 750+ for the lowest possible mortgage rates
Steps to improve your credit:
- Keep credit card balances below 30% of the limit.
- Pay all bills on time, including utilities and loans.
- Avoid multiple hard credit inquiries before your mortgage application.
4. Lower Your Debt-to-Income Ratio (DTI)
Lenders want to ensure that your total monthly debt payments are manageable.
- Keep total monthly debt below 40% of gross income.
- Pay down business or personal loans before applying for a mortgage.
- Avoid taking new loans or credit lines just before mortgage approval.
5. Exploring Lender Options for Self-Employed Borrowers
When applying for a mortgage, self-employed Canadians have several options, including:
A. Traditional Banks and Credit Unions
- Require two years of income tax returns and consistent income
- Offer competitive mortgage rates for those with strong financials
- May be less flexible in considering fluctuating income
B. Alternative Lenders (B Lenders)
- Accept lower credit scores and non-traditional income verification
- Require higher down payments (typically 20% or more)
- Offer slightly higher interest rates than prime lenders
C. Private Lenders
- Suitable for those with irregular income, poor credit, or high debt
- No strict income verification, but higher interest rates apply
- Short-term solution for refinancing or quick approval needs
For self-employed professionals in Surrey, Abbotsford, and Fraser Valley, Sandhu & Sran Mortgages specializes in matching borrowers with the right lenders, ensuring they receive competitive rates and flexible approval options.
6. Best Mortgage Products for Self-Employed Home Buyers
Choosing the right mortgage depends on income stability, financial goals, and risk tolerance.
A. Fixed-Rate Mortgages
- Ideal for those seeking predictable payments
- 5-year fixed terms are common among self-employed borrowers
- Rates depend on bond yields and lender risk assessment
B. Variable-Rate Mortgages
- Lower initial rates, but fluctuate with Bank of Canada rate changes
- Best suited for borrowers who can handle interest rate fluctuations
- Historically, variable rates have been cheaper over the long term
C. Stated Income Mortgages
- Available through alternative lenders
- Require bank statements and proof of self-employment instead of tax returns
- Often come with slightly higher interest rates
D. Home Equity Line of Credit (HELOC)
- Useful for self-employed business owners who need flexibility
- Allows borrowing up to 65% of home value
- Rates are variable, tied to prime rate
If you are self-employed and looking for a tailored mortgage solution, Sandhu & Sran Mortgages can help assess the best option for your situation.
7. Why Work with a Mortgage Broker for Self-Employed Mortgages?
Self-employed mortgage approvals require strategy—and that’s where a broker can help.
A. Access to a Wider Range of Lenders
Unlike banks that offer limited mortgage products, brokers work with multiple lenders, including alternative and private lenders who specialize in self-employed mortgages.
B. Custom Mortgage Solutions
Brokers analyze your income, credit, and financial profile to structure a strong application, improving approval chances.
C. Better Mortgage Rates and Terms
With access to preferred mortgage rates, brokers negotiate better deals than most borrowers would secure independently.
D. Faster Approval Process
Instead of dealing with bank bureaucracy, brokers streamline the mortgage approval process, reducing stress and delays.
At Sandhu & Sran Mortgages, we work closely with self-employed home buyers in Surrey, Abbotsford, and the Fraser Valley to secure the best mortgage rates and loan terms.
8. Key Steps to Improve Mortgage Approval Odds
For self-employed Canadians, preparation is key. Here’s how to improve mortgage eligibility:
✅ Keep Business and Personal Finances Separate – Maintain clear financial records
✅ Minimize Business Write-Offs – Higher reported income boosts mortgage approval chances
✅ Improve Credit Score – Aim for 750+ to access the lowest mortgage rates
✅ Save for a Bigger Down Payment – 20%+ avoids CMHC insurance costs
✅ Consult a Mortgage Broker – Get expert guidance on lender options
By taking these steps, self-employed home buyers in Surrey and across BC can secure better mortgage rates and realize their homeownership dreams.
Conclusion: Get the Best Mortgage as a Self-Employed Home Buyer
Securing a mortgage as a self-employed Canadian can be challenging, but with the right strategy, it’s possible to access competitive rates and favorable terms.
Why Choose Sandhu & Sran Mortgages?
✅ Specialized self-employed mortgage solutions
✅ Access to major banks, B lenders, and private lenders
✅ Fast approvals and expert mortgage structuring
✅ Serving Surrey, Abbotsford, and Fraser Valley
📞 Need a self-employed mortgage? Contact Sandhu & Sran Mortgages for a consultation today!