No Proof of Income Mortgage (Alt-A Program)
At MyMortgage.ca we understand that as a consultant, contract worker, or independent business owner your taxable income may not reflect your true income. And with more Canadians becoming self-employed everyday lending institutions have developed a mortgage based on credit history and confirmation that you don’t have any outstanding taxes. With this new program Canada’s working population can now obtain financing up to 90% of the value of the property they are buying.
Stated Income Business For Self Critera
At MyMortgage.ca we understand that as a consultant, contract worker, or independent business owner your taxable income may not reflect your true income. And with more Canadians becoming self-employed everyday lending institutions have developed a mortgage based on credit history and confirmation that you don’t have any outstanding taxes. With this new program Canada’s working population can now obtain financing up to 95% of the value of the property they are buying.
Who Qualifies?
Clients with good credit rating and have no outstanding personal taxes. They must prove they have been self-employed for a minimum of two years. This can be confirmed via a third-party arms length document. For example, documentation such as a business credit report, business licence, G.S.T. returns or articles of incorporation. In addition, the borrower is required to declare their annual income, which should be reasonable based on the industry, length of operation and type of business.
Qualify today based on CREDIT and STATED income!
Eligible Properties:
- Maximum 4 units where at least 1 unit must be occupied as the principal residence
- Existing and new construction
- Readily marketable residential dwellings up to four units, located in markets with demonstrated ongoing re-sale demand
- Older homes (pre 1950) must have been substantially modernized and the estimated remaining property (economic) life must equal the amortization
- New construction must be covered by New Home Warranty Program
Occupancy:
- Owner occupied, primary residence. All applicants used to qualify must occupy the property.
- Spousal guarantors acceptable provided they occupy the subject property
- Non-occupant co-borrowers or guarantors not permitted
Amortization:
- Fully amortizing mortgages only
- Maximum 30 years
- Insurance for all of our extended amortization products will include a 0.20% premium surcharge for every 5 years of amortization beyond the traditional 25-year mortgage amortization period
Borrower qualification:
- Strong credit and credit score (for minimum bureau score requirements see the premium matrix below)
- Insurer will average the scores pulled from both credit bureaus for each borrower, and the minimum score requirement will apply to all borrowers on the application
- No mortgage, installment or revolving credit delinquencies appearing on the credit bureau in the past 12 months
- No reported defaults on residential mortgages for the past 7 years
- No previous bankruptcy
- No gifted / borrowed down payment allowed
- Lender to ensure borrower(s) have no tax arrears (recent NOA or a signed affidavit by the borrower(s) will suffice)
Credit Score / GDS / TDS
680+ N/A 44%
600-679 35% 42%
Self employed borrowers:
- 2-years self-employed tenure is recommended, however will consider borrowers with less than 2-years BFS tenure depending on the length and type of previous employment.
- One (1) form of written third party documentation confirming self-employment tenure must be on file
- Lender is required to capture the borrower's "Stated" income and submit as part of the application. (This should be documented on the loan application and no other documentation is required to satisfy this condition)
- The "Stated" income should be reasonable based on the type and size of the business, and should be able to service the required mortgage as per the GDS/TDS Guidelines above
- Reasonableness of the income and debt servicing ratios are a factor in the approval of the loan
Commissioned sales:
- A commissioned sales applicant is defined as someone who derives 100% of their income from a commissioned source, regardless of whether they receive a T4
- The lender is responsible for ensuring that the borrower is a commissioned sales applicant as defined above, with a minimum of two years tenure, for example by way of letter of employment, T1 Generals or T4's
- Commissioned sale applicants who are paid a salary plus commission are NOT eligible under this program and must qualify in the usual manner (e.g. GDSR/TDSR and income confirmation will be required)
Documentation Requirements:
Sole Proprietorship A one-owner operation where the owner directs all the activities of the business, assumes all authorities and obligations, and is liable for its business debts. The sole proprietor income is reported to revenue Canada on the standard tax return (T1 General) together with Revenue Canada's required statement of business or professional activities.
Documentation requirements - Any one of the following:
- Business License
- Business Credit Report
- GST/HST Return Summary
- T1 Generals with statement of business activities attached for a minimum 2 years
- Audited Financial Statements for the last 2 years, prepared and signed by a CA
- Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears
Partnerships:
Partnerships are businesses owned by two or more individuals who share the profits or losses of the business operation. The partnership income is reported to Revenue Canada on the standard tax report (T1 General) together with Revenue Canada's required statement of business or professional activities, which reflects the percentage of the NET income or loss for each partner of the enterprise.
Documentation requirements - Any one of the following:
- Business License
- Business Credit Report
- GST/HST Return Summary
- T1 Generals with statement of business activities attached for a minimum 2 years
- Audited Financial Statements for the last 2 years, prepared and signed by a CA
- Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears
Corporations:
A limited company or corporation is a legal entity, separate from the persons (all shareholders) who own it. The business can own assets, enter into contracts and conduct business transactions in its own capacity. The company is called limited because the liability of the shareholders is limited to their investment. All provincial Corporations must obtain articles of incorporation from the province in which they are registered or may be federally incorporated. The applicant's personal income will be reported by T4 from the corporation.
Documentation requirements - Any one of the following:
- Articles of incorporation
- Business Credit Report
- Audited Financial Statements for the last 2 years, prepared and signed by a CA
- Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears
Premium Rates:
Loan to Value (LTV) Ratio / Credit Score / Premium on Total Loan
85.01% - 90% 650 4.75%
80.01% - 85% 620 2.90%
75.01% - 80% 620 1.64%
65.01% - 75% 600 1.00%
< 65% 600 0.80%
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