Self-Employed Income Calculator

Lowest rates available for self-employed borrowers with strong documentation.

Faster approval with less documentation, but higher rates and fees.

💡 Example: Net income $60k + $15k CCA + $5k home office = $80k qualifying income (33% increase!)

How do lenders calculate income for self-employed borrowers?

Lenders use a process called 'income normalization' where they take your net business income from your T1 tax return and add back certain expenses, such as CCA (depreciation), business-use-of-home and motor vehicle expenses (the add-backs CMHC lists), and sometimes documented one-time costs. They then typically average the last 2 years. For insured mortgages, CMHC also lets sole proprietors and partners gross up business income by 15% instead. For example: Year 1 net $80k + $10k CCA = $90k. Year 2 net $90k + $10k CCA = $100k. Average = $95k qualifying income.

What are 'add-backs' and why do they matter?

Add-backs are expenses you claimed on your taxes that lenders add back to your income because they don't represent actual cash leaving your business. Common add-backs: CCA/Depreciation (Line 9936 on T2125), Business-use-of-home expenses (Line 9945), and One-time expenses (with CPA letter). How much they add depends on what you claimed and on the lender's policy.

What's the difference between Prime and Alt-A lenders for self-employed?

Prime lenders offer the lowest rates but typically want about 2 years in business (CMHC recommends 24 months), full tax documentation (T1 Generals, NOAs, T2125s) and stable or increasing income. Alt-A (stated income) programs rely more on your stated income and bank statements and charge higher rates and often a fee. Sagen's insured Business for Self (Alt. A) program still looks for 2 years in business and allows up to 90% loan-to-value on a purchase; some uninsured alternative lenders accept newer businesses with a larger down payment.

Why would lenders use my most recent year instead of averaging 2 years?

If your income declined significantly year-over-year, many lenders use only the lower, most recent year instead of averaging (thresholds vary; this calculator does so at a 10% decline). This protects them against declining income trends. Example: Year 1 $100k, Year 2 $80k (20% decline) = lender uses $80k, not the $90k average.

What documents do I need for a self-employed mortgage in BC?

For Prime lenders: 2 years T1 General tax returns + NOAs (Notice of Assessment), 2 years T2125 (Statement of Business Activities), business license/registration, business bank statements, and optionally a CPA letter. For corporations, 2 years of T2 corporate returns and financial statements replace the T2125. Alt-A programs ask for less income documentation but still verify your business (for example, a business license, GST/HST return summary or business registry search) and your credit.

Can I get approved if my business is less than 2 years old?

Sometimes. CMHC recommends 24 months in business but allows flexibility for recently self-employed borrowers, for example if you have experience in the same line of work, bought an established business or have strong cash reserves. Some uninsured alternative lenders also accept newer businesses, at higher rates and usually with a larger down payment. Once you have 2 years of filed returns, you may be able to move to a prime lender at renewal.