The self-employed can bank on buying their own home

As a freelance writer, I've lived in three apartments in four years. One apartment shook every time a train went by. Another had a piano teacher living below it, which guaranteed a 10 a.m. Saturday wake-up to off-key piano lessons. My current place is home to a friendly mouse.

Given these experiences, it's with more than a tinge of envy that I watch my friends put down payments on houses and condos. As lawyers, social workers and bankers, their steady salaries allow them to get mortgages. But what about the self-employed individual like me? Can we, too, get mortgages or does our nonsalaried status mean we're destined to remain renters?

Self-employed people can qualify for the same mortgages as salaried people, explains John Turner, director of mortgage sales at the Bank of Montreal. Self-employed people are "some of our best customers."

TD Canada Trust's Joan Dal Bianco echoes that sentiment.

"We treat anybody who is self-employed similar to how we treat anyone else," says the vice-president of real estate secured lending.

Like salaried employees, not every self-employed person will be eligible for every mortgage. Qualifying for a mortgage depends on various factors, including credit history, debt levels and income. There are some crucial differences between salaried employees and self-employed workers. From a bank's perspective, self-employed persons can be more risky. They don't have some of the safety nets that a salaried individual has, such as severance.

Another difference relates to how income is proven. Salaried employees present a bank with a statement of income from their employer. But with self-employed workers, there's no employer to provide that information.

For proof of income, a bank will typically ask a self-employed person for three years of tax returns.

If you're self-employed and don't have three years' worth of tax returns, that doesn't mean you can't get a mortgage. For instance, BMO will work with self-employed clients to confirm their income. To qualify, they must have a minimum down payment of 20 per cent of a house or condo's purchase price.

The category of self-employed workers includes accountants, lawyers, doctors and investment advisers.

Read more on this topic:

- Looking inside your mortgage options
- Guarding your home
- First timers weigh benefits, risks
- Young shouldn't be so restless
- Some homebuyers green with envy
- Banks work with immigrants