How Self-Employed Canadians Can Qualify for a Mortgage Without Traditional Income

If you’re a self-employed business owner in Canada, getting a mortgage through a traditional bank can feel impossible.

You may earn strong revenue, yet your accountant prepares your taxes in a way that minimizes taxable income — smart for tax season, but devastating for mortgage qualification.

This is why so many entrepreneurs hear:

“Your income is too low to qualify.”

But here’s the truth:

You can qualify for a mortgage without relying on low taxable income — you just need a lender who looks at your real income.

This is where Alternative (or near A lenders) and bank-statement mortgage programs come in. These programs are built specifically for business owners who deposit strong revenue but show less income on paper.

Why Traditional Banks Decline Self-Employed Income

Big banks (A-lenders) rely heavily on:

• Notices of Assessment
• T1 Generals
• Accountant-prepared financial statements
• 2 full years of consistent, provable net income

But most business owners legally use deductions to reduce taxable income.

Common write-offs include:

• Vehicle expenses
• Fuel
• Equipment and tools
• Rent or home-office expenses
• Advertising
• Supplies
• Staff wages
• Meals & entertainment
• 
  

By the time these are deducted, a successful business can look unprofitable on paper.

Example:

A general contractor who deposits $20K/month may show only $60K in taxable income after write-offs.

Banks evaluate them as if they only earn $60K — even though their real income is much higher.

How Bank-Statement Mortgage Programs Work

Instead of focusing on your taxable income, alternative lenders review your cash flow.

They analyze:

• 12 months of business or personal bank statements
• Total monthly gross deposits
• Business type
• Income consistency or seasonality
• Your credit score & debts

They then apply an income factor to your deposits to calculate your qualifying income.

This typically ranges from 40% to 60% of total deposits, depending on your industry and expense structure.

Example:

If you deposit $20,000/month, a B-lender may calculate:

$20,000 x 12 months = $240,000 annual deposits

$240,000 x 50% = $120,000 qualifying income

That’s double what a bank might use if your taxable income is only $60K.

Calculate your business income using our bank statement income calculator

Real Examples: How Different Business Types Are Evaluated

1. General Contractor (Depositing $18–22K/month)

• Deposits fluctuate based on projects
• Lots of write-offs (fuel, tools, labour)
• A-bank: “Your income is too low or inconsistent.”
• Alternative-lender: “Your deposits show strong earning power.”

Qualifying income: Often 2x–3x higher under B-lenders.

2. Makeup Artist / Beauty Professional

• Seasonal boosts (weddings, events, holidays)
• High expense write-offs
• A-bank: Declined due to inconsistent income
• B-lender: Income is averaged across 6–12 months

Qualifying income: Seasonal dips are averaged out.

3. Home Daycare Owner

• Predictable weekly/biweekly payments
• Large portion of expenses written off
• A-bank: Shows very low net income
• B-lender: Uses gross deposits as proof of stable revenue

Qualifying income: Usually significantly higher than taxable income.

4. Pet Groomer

• High transaction volume
• Consistent clientele
• Expenses reduce net income on taxes
• B-lender focuses on actual money coming in

Qualifying income: Reliable deposit patterns work in their favour.

Typical Down Payment Requirements

Most bank-statement mortgage programs require:

• 20% down payment for purchases
• 20–35% equity for refinances
• Credit score of 600+ (some leniency available)
• 
  

Lower credit scores or higher-risk files may require:

• Higher down payment
• Additional documentation
• Slightly higher rates

But the key advantage is that these lenders are built to serve self-employed borrowers specifically.

Why This Helps You Qualify for More Than Traditional Lenders Offer

With B-lenders:

• Your business deposits are your income.
• Seasonal or fluctuating income is acceptable.
• Reasonable write-offs no longer penalize you.
• You qualify based on real earning ability.

Many self-employed Canadians qualify for:

• Higher purchase prices
• Refinances to access equity
• Debt consolidation (calculate whether Debt Consolidation is right for you)
• Home upgrades or investment properties

When using a lender who actually understands how entrepreneurs get paid, the difference can be huge — often 40% to 150% more borrowing power.

Final Thoughts: You Don’t Need Perfect Taxes to Qualify — You Need the Right Lender

If you own a business — whether you're a contractor, makeup artist, daycare operator, pet groomer, or freelancer — your low taxable income doesn’t reflect your real earning power.

Bank-statement programs give you the ability to qualify based on cash flow, not accounting strategy.

They help you:

• Buy sooner
• Qualify for more
• Access your home equity
• Reduce high-interest debt
• Avoid waiting years to restructure your taxes

For thousands of self-employed Canadians, B-lenders are the bridge between “declined” and “approved.”