Here's the whole problem in one line. The better you are at taxes, the worse you look to a bank.
Say a Barrie contractor grosses $180,000 and legally writes off the truck, the tools, the phone and part of the house, landing at $58,000 of net income. At the branch, that's a $58,000 mortgage conversation. Not because the business is weak. Because that's the number the formula reads.
The fix isn't to stop writing things off. It's to put your file in front of a lender that reads income the way you actually earn it.
How Do Banks Calculate Self-Employed Income?
Most banks want two full years of T1 Generals and Notices of Assessment. They average your income across those two years, and if the latest year dropped, they often use the lower one. Some lenders add back a portion of a sole proprietor's income to account for normal write-offs. Not all do.
Incorporated? Then it depends on what you pay yourself. Salary and dividends count. Money you leave in the company usually doesn't, although some lenders will consider part of it. And any balance owing to CRA has to be dealt with, which I cover in what to do about CRA tax arrears.
Barrie Work That Banks Misread
Barrie's economy is full of income that's real, steady over time, and awkward on paper:
- Trades and construction, where January and February are slow every single year
- Tourism and ski-season work tied to the hills around Barrie, paid mostly in a few months
- Realtors, sales reps and anyone on straight commission
- Contract roles, including some health care and college positions paid as independent contractors
- GTA commuters who left a salaried job to consult from home
Seasonal doesn't mean unqualified. Most lenders want a two-year track record and will average it. What they need is to see the pattern repeat.
Your Options When the Bank Says No
| Lender type | How income is proven | Typical down payment | Cost |
|---|---|---|---|
| A lender (bank or monoline) | Two years of NOAs, averaged | As low as 5% if the NOAs qualify | Lowest rates |
| B lender, stated income | Income stated and reasonable for your industry, backed by business proof | Usually 20% or more | Higher rate plus a lender fee |
| Bank statement program | 6 to 12 months of business deposits | Usually 20% or more | Similar to B lender |
| Private lender | Equity and down payment come first | Often 15% to 25% | Highest, short terms |
Rates and fees move, so treat that table as the shape of the market rather than a quote. I explain the middle two rows in more depth in my guide to stated income mortgages.
Self-Employed for Less Than Two Years?
It's harder, not impossible. Some lenders will work with one year of self-employment if you did the same kind of work as an employee before, like an electrician who went out on their own. A bigger down payment helps. So does clean credit.
How to Get Your File Ready Before You Shop
- Two years of T1 Generals and Notices of Assessment
- Business registration or articles of incorporation
- Six to twelve months of business bank statements
- Proof your CRA account is paid up, or a payment plan in place
- Ninety days of history on your down payment
My Take
Self-employed files are most of what I do. They're also where the gap between a bank's answer and the market's answer is widest. Honestly, the worst move is letting one branch decline you and assuming that's the verdict. It almost never is.
For the full picture on self-employed borrowing, start with my self-employed mortgage guide. Buying in Barrie specifically? Here's how I help on my page for Barrie buyers.
Common Questions
Can I get a mortgage in Barrie if I've been self-employed less than two years?
Sometimes. Some lenders accept one year of self-employment if you worked in the same field as an employee first. Expect to need a larger down payment and strong credit, and expect fewer lenders to choose from.
What is a stated income mortgage?
A stated income mortgage lets a self-employed borrower state an income that's reasonable for their industry, backed by business documents, instead of relying only on the net income on their Notice of Assessment. It's usually offered by B lenders and typically needs 20% down.
Do I need 20% down if I'm self-employed?
Not always. If your two-year average income on your NOAs qualifies, you may get an insured mortgage with as little as 5% down. Stated income and bank statement programs usually need 20% or more.
Does seasonal income count for a mortgage?
Yes, if it's consistent. Lenders usually want a two-year history and will average your income, so a slow winter or a summer-only season can still qualify.
