New CMHC measures to help self-employed Canadians buy a home

If you're self-employed, you're part of a growing trend. About 15 per cent of Canada’s workforce is now self-employed, a group that typically finds it more difficult to qualify for a mortgage because their income may vary or be less predictable. As of October 1, 2018, Canada Mortgage and Housing Corporation (CMHC) mortgage loan insurance will be available to lenders helping self-employed borrowers. Lenders will be able to:

• lend to self-employed borrowers in business for less than 24 months; and
• accept a broader range of documentation for satisfying income and employment requirements when qualifying self-employed borrowers, including the Notice of Assessment (NOA) accompanied by the T1 General, the Canada Revenue Agency (CRA) Proof of Income Statement, and the Statement of Business or Professional Activities (T2125) to support an “add back” approach for grossing up income for sole proprietorship and partnerships.

The policy changes will apply to self-employed borrowers who have a down payment of less than 20 per cent and require high-ratio default insurance or have a down payment of more than 20 per cent but still require mortgage insurance because they’re self-employed. Making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance will help home buyers benefit from competitive interest rates. The policy changes are in keeping with Canada’s new National Housing Strategy which has a goal of addressing the housing needs of all Canadians.