Provided by Genworth Financial Canada
Getting a mortgage to buy a home for self-employed workers and those who work strictly on commission poses particular challenges.
About 1 in 7 Canadian workers were self-employed in 2018, accounting for 15% of total employment compared with 12% in 1976. The share of women among self-employed workers increased from 26% in 1976 to 38% in 2018.
In 2018, 2.9 million Canadians were self-employed, up from 1.2 million in 1976.
Self-employed borrowers and commission sales people normally do not have the same income stability that regular salaried workers in Canada have. This segment of the Canadian labor force can apply for a regular mortgage to finance or refinance a home but the process is onerous and typically may result in higher interest rates.
Genworth Financial Canada has developed a specialized mortgage insurance program, available through financial lenders and mortgage brokers, to help self-employed and wholly commissioned workers receive a high, loan-to-value mortgage at regular interest rates, quickly and easily, to either purchase or refinance a home.
Self-employed persons must prove they have been in self-employment for at least three years by supplying at least two forms of written, third party documentation such as a business credit report, business licence, Goods and Services Tax returns or articles of incorporation.
Self-employed applicants do not need to disclose the nature of their business but must show a strong credit rating with no mortgage, installment or revolving credit delinquencies and no reported defaults on residential mortgages in the past seven years.
Commission sales applicants are defined as someone who receives 100 per cent of their income from commissions.
Commissioned applicants must supply one form of written third party documentation through letters of employment, T4 or income tax returns (T1 General) showing at least two years of commission sales income as defined above.
The program will fund up to 90 per cent of the purchase price or 85 per cent of an existing property for refinance purposes, to a maximum loan amount of approximately $450,000.
Eligible properties include existing and new construction properties with a maximum of two units where at least one unit is occupied as the principal residence.
To qualify, all applicants must occupy the property. Spousal guarantees are also acceptable provided they occupy the property.
The Genworth Program is available through banks and other lending institutions. If you feel you qualify, check your local lending institution or contact Genworth Financial Canada (formerly GE Mortgage Insurance Canada) at: http://www.genworth.ca.