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Originally posted by Vel1


CDs,

while self-employed individuals are applying for mortgage, does the lender look into the gross income or net taxable income, to assess the financial status?

Thanks in advance.

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Mortgage for self employed people depends on lots of factors and every lender has its own guidelines to look at these. Every case is unique and may be view differently by different lenders.

Some of these factors are:

Credit Rating
Earning Potential
Down Payment
Gross Income and Net Income
How long in the same field
whether own business or solely commission income as in independent contractor.
Any tax owing to CRA etc. etc.

The lenders and insurers mostly will look at the net income over a period of 2 to 3 years and average it out. They might allow 15% add back in taxable income to bump it up. Some of the lenders may even ask for full T1 General and or business returns as well.