In general, for many years, most of the banks and lenders have had in place programs to approve clients that are “business for self” under what they call “stated income” guidelines. Typically banks and lenders use line 150 on the Notice of Assessment’s as proof of income for qualifying purposes on a mortgage. Essentially under the stated income programs, the lenders recognize that most self employed individuals are incented to reduce the amount showing on 150, and would allow for other qualifications on the application to play a larger role in the approval. In other words, the lenders would recognize a much higher amount of income than what is actually reported on line 150. Many of our self employed clients are regularly approved through these stated income programs.
In recent weeks we’ve seen a few of the big banks and lenders discontinue these stated income programs. While we still have some lenders that work under these guidelines, there is speculation that we may see an overall tightening of approvals in this area, and more lenders may follow.
As the spring market approaches, if you are considering either upgrading or purchasing income properties, you may want to consider it sooner rather than later as there is a risk that the stated income programs may not be available in the future. Speak to your mortgage expert for advice that is appropriate to your circumstances.
This information is provided by Sheri Creese, VP Sales & Service/Mortgage Agent at mortgagebrokersottawa.com
Posted by Jennifer Stewart in Blog, Buying & Selling, Buying a Home.
Tags: Mortgage Income Programs, Mortgages for Self-Employed, Self-Employed Buyers
