Self-employed affordability
BFS (business-for-self) qualifying differs by lender tier. A-tier uses declared net; alt-A grosses up; stated-income private uses revenue. See your ceiling under each.
Your scenario
Result
Alt-A and private mortgages typically price 50-150 bps over A-tier with a 0.5-1.0% lender fee. Plan for higher all-in costs.
BFS mortgage qualifying — three tiers
Self-employed (BFS) borrowers face a different qualification landscape than salaried W-2 workers. Canadian lenders bucket BFS applicants into three tiers depending on how much income you formally declare vs how much you actually earn.
A-tier — declared net
Big banks (RBC, TD, Scotia, BMO, CIBC) and most monolines (First National, MCAP, Merix) use your declared net income from your last two T1 General returns + Notice of Assessment. No gross-up. This is the cleanest path but means your formal qualifying ceiling is whatever you actually paid tax on.
Best for: BFS borrowers who declare meaningful net income (close to $80k+/yr) and want bank-tier rates.
Alt-A — gross-up by 15%
Alt-A lenders (Equitable Bank, Haventree, Home Trust, B2B Bank) recognize that BFS borrowers often write off significant business expenses against income. They gross up your declared net by 10-20% (most commonly 15%) to derive a qualifying income that better reflects actual cash flow.
Best for: BFS borrowers with 2+ years of declared income who would benefit from a modest qualifying lift. Expect rates 50-150 bps over A-tier + a 0.5-1.0% lender fee.
Stated income / private — revenue with haircut
Private lenders and some alt-A programs use gross business revenue with a 30-40% haircut. No T1 General required; bank statements + business financials substitute. The qualifying ceiling can be 2-3x higher than A-tier on the same borrower.
Best for: Recently self-employed (under 2 years), heavy write-off scenarios, or borrowers in transition. Expect rates 200-400 bps over A-tier with 1-3% lender fees and a 12-24 month term as a bridge.
What every Canadian BFS borrower needs
- 2 years of T1 General income tax returns + Notice of Assessment (or 1 year for some alt-A programs)
- Business financial statements (if incorporated)
- Bank statements showing consistent deposits matching declared income
- Business registration / GST number / professional licence as applicable
- Personal credit score 680+ for A-tier; 600+ for alt-A; private goes lower
Federal stress test still applies
Whatever tier you use, the federal mortgage stress test applies. You must qualify at the higher of contract rate + 2% or 5.25% floor. This calculator builds that into the math.