CMHC makes favourable announcement regarding self-employed borrowers
CMHC is giving lenders more guidance and flexibility on determining whether a self-employed person qualifies for a mortgage
OTTAWA — Canada Mortgage and Housing Corp. is making changes intended to make it easier for the self-employed to qualify for a mortgage.
The national housing agency says it’s giving lenders more guidance and flexibility to help self-employed borrowers.
Self-employed Canadians may have a harder time qualifying for a mortgage as their incomes may vary or be less predictable.
CMHC is providing examples of factors that can be used to support the lender’s decision to lend to borrowers who have been operating their business for less than 24 months, or in the same line of work for less than 24 months.
Those factors include purchasing an established business, sufficient cash reserves, predictable earnings and previous training and education.
The other change will provide a wider range of documentation options to meet income and employment requirements, CMHC says.
The options can include the Notice of Assessment accompanied by the T1 General, the CRA Proof of Income Statement and the Statement of Business or Professional Activities “to support an ‘add back’ approach for grossing up income for sole proprietorship and partnerships,” says the release.
The changes, which apply to both transactional and portfolio insurance, will take effect Oct. 1.
CMHC chief commercial officer Romy Bowers said self-employed Canadians represent a significant part of the workforce.
“These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates,” Bowers said in as statement.
Source: business.financialpost|com & advisor|ca