Why self-employed approval is different
Lenders need to see that your income is steady enough to cover the payment. With a job, a pay stub shows that quickly. When you work for yourself, income can change from month to month, and many business owners lower their taxable income with write-offs. Lenders look at that taxable income, which can make you look like you earn less than you do.
Income proof lenders usually accept
- Your last two years of Notices of Assessment (NOA) from the CRA.
- Your last two years of T1 General tax returns.
- Three to six months of business or personal bank statements showing regular deposits.
- Your business registration or GST/HST number.
- Invoices or contracts showing ongoing work, if you are newer to self-employment.
Self-employed? See what you qualify for
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If you've been self-employed less than two years
Some lenders want two years of history. Others will work with less if you were in the same line of work as an employee before, if your bank statements show steady deposits, or if you have a co-signer or down payment.
Ways to strengthen your application
- Keep business and personal banking separate so deposits are easy to follow.
- Make sure your tax filings are up to date with no balance owing to the CRA.
- Put money down to lower the amount borrowed.
- Choose a vehicle priced well within your proven income.
- If you use the vehicle for work, ask your accountant about business-use deductions.