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Self-employed? How lenders look at your income

By Ryan Grafton · November 4, 2026 · 4 min read

Last updated: November 4, 2026

If you work for yourself, lenders read your income differently than a regular paycheque.

That doesn't make it harder to explain. It just means a different file.

So whether you're a contractor in Castlegar, you cut hair in Rossland or you run a shop in Nelson, here's what most lenders want to see, and why.

What most lenders ask for

Most lenders ask for two years of personal tax returns and your Notices of Assessment.

The tax return is your T1 General. The Notice of Assessment is the CRA's summary of that return, sent after they've processed it. If you can't find yours, you can get them from your CRA account online.

You may also be asked for:

  • Business financial statements, if you're incorporated
  • Your business registration or articles of incorporation
  • Proof that your personal taxes are paid up to date

Time in business matters too. Many lenders like to see two years. For insured mortgages, CMHC recommends at least 24 months running the business or working in the same line of work, and there's some flexibility if you're newer.

Once it's time, you'll fill in the brokerage's secure application and send me your documents.

Why the number's often smaller

This is the part that surprises people. The income lenders start with often isn't what the business brings in.

Here's an example, and it's only an estimate. Say a sole proprietor's business brings in $120,000 in a year. After $70,000 in expenses, the tax return shows $50,000.

Most lenders start with the $50,000. The write-offs are legitimate, and they lower your tax bill, but they also lower the number on the page.

Some lenders look past that a little. For insured mortgages, CMHC recognizes that self-employed people deduct expenses, and its program allows for some of them to be added back. Policies differ from lender to lender.

Please don't change how you file just because of a mortgage. Talk to your accountant first. I'm not a tax advisor, but I can show you how a lender's likely to read what you've got.

Sole proprietor or incorporated?

Generally speaking, it changes where your income shows up.

As a sole proprietor, your business income and expenses go on a form called the T2125, which is part of your personal tax return. So your personal return tells most of the story.

If you're incorporated, the company files its own return, called a T2. Your personal return usually only shows what you've paid yourself. That's why lenders often want to see the company's financial statements too, so they can see the whole picture.

How much of the company's income they'll consider depends on the lender.

Taxes owing to the CRA

This one matters more than people think.

Your Notice of Assessment shows your balance, so a lender can see if you owe. And if a tax debt doesn't get paid, the CRA can take legal action, including putting a lien on your assets. That's the kind of thing a lender wants sorted out first.

That's why most lenders want to see your personal taxes paid up to date. If you've got a balance owing, tell me early. It's a lot easier to plan around than a surprise.

Lenders don't all see it the same way

Two lenders can look at the same file and land in different places. Some are more comfortable with self-employed income than others.

Some lenders, including alternative lenders, look at income differently and may consider your business history as well. That can help, but it usually comes at a cost, and these programs often need a bigger down payment.

The stress test still applies, so it's worth reading how that works too.

Where to start

Run your numbers through the affordability calculator, using the income from your tax return. It's an estimate, but it's a good first look.

The self-employed page has more on how I work with business owners.

Then book a 15-minute call and we'll go through what your returns show.

This is general information from Ryan Grafton, Mortgage Broker, not advice for your situation. Estimates only. This isn't advice, a rate quote or a pre-approval. Your real numbers depend on your lender and your approval. Rules as checked on November 4, 2026.

Sources

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