Mortgage Changes Part 3 – Self Employed
Changes to self employed mortgage programs
This set of changes will happen slightly earlier than the other 2, by or before April 9, 2010.
Here is a summary of the changes and impact to self employed individuals and their insured mortgage program:
- New minimum down payment, increased to 10% of the purchase price
- New maximum refinance, reduced to 85% of the property’s current market value
Banks and insurance companies will also now be wanting to confirm the true annual income of self employed individuals. This is in contrast to the past where self employed individuals have been able to “state” an income that did not totally need to be confirmed via third party documentation (program designed to address individuals how have cash component to their business). As such, to confirm income for self employed people, the two (2) most recent years of tax returns (T1 Generals) and Notice Of Assessments (NOAs) will be collected on all deals and the amount of income that is indicated here will be the number that the banks want to work with to determine the amount one can be approved for. Due to these changes it is highly recommended that all self employed individuals push all of their income, even if cash, through their tax returns so they can get credit for it when applying for a mortgage or any other loan for that matter.
If you are self-employed and have equal to or greater than 35% of the purchase price as a down payment, please contact me directly for special programs tailored for this situation.
There are however, two (2) key benefits if a self employed person can verify all of their income when qualifying for a mortgage:
- They may now qualify for a lower down payment (5% vs. 10%)
- They will save on the insurance premium as it will be half what it would have been otherwise
If you are self employed and would like to confirm your mortgage pre-approval or approval, contact me at any time.
(604) 603-2520 – maury@maurylum.com
