Getting a mortgage is challenging enough when you’re self-employed, but if you’ve been running your business for less than a year, it can feel almost impossible. Lenders typically look for two years of income history to ensure stability, which can leave new entrepreneurs—like Canadian influencers, gig workers, and solopreneurs—with unpredictable income feeling stuck. The good news? It’s not impossible. With the right strategies and preparation, you can still secure a mortgage.
Why Lenders Prefer Two Years of Income History
Most lenders rely on two years of tax returns to assess income stability and determine if you’re a reliable borrower. For those who’ve been self-employed for less than a year, the absence of a track record can make you appear riskier in their eyes.
But don’t let this discourage you. Some lenders and strategies cater specifically to new self-employed borrowers, giving you a path to homeownership.
How to Get a Mortgage with Less Than 1 Year of Self-Employment
Here are the steps and tips to improve your chances of mortgage approval when you’re newly self-employed:
1. Leverage Your Previous Employment
If you recently transitioned from a traditional job to self-employment, lenders may consider your previous income. For example:
- If you’ve entered the same industry as your previous job, this shows continuity in your career and can help build trust with lenders.
- Providing your last T4, pay stubs, and Notice of Assessment (NOA) from your employment can demonstrate income stability before your self-employment.
2. Save for a Larger Down Payment
A larger down payment reduces the amount you need to borrow, which can make lenders more willing to approve your mortgage. It also reassures them of your financial commitment to the property.
If possible, aim for a down payment of 20% or more. This will also help you avoid paying mortgage default insurance.
3. Use Alternative Lenders
While traditional banks may turn you away, alternative lenders or credit unions often have more flexible requirements for self-employed borrowers with less than one year of income history.
Alternative lenders focus on:
- Overall financial stability rather than strict income history.
- Bank statements to prove cash flow.
- Equity in the property (via a higher down payment).
Though their interest rates are typically higher, alternative lenders are a great option for those just starting their business.
4. Provide Bank Statements
Even without a full year of tax returns, showing consistent deposits and healthy cash flow in your business bank account can reassure lenders. Many alternative lenders request 6–12 months of bank statements as proof of income.
Pro Tip: Keep personal and business accounts separate to make your finances easier to track and present during the mortgage process.
5. Improve Your Credit Score
A strong credit score can make up for a lack of income history in some cases. Lenders see a high credit score as proof that you’re financially responsible and less likely to default on payments.
To boost your credit score:
- Pay off outstanding debts or reduce balances on credit cards.
- Avoid taking on new debt before applying for a mortgage.
- Make all bill payments on time, including utilities and loans.
6. Get a Co-Signer
If you’re having trouble qualifying on your own, adding a co-signer to your mortgage application can strengthen your case. A co-signer’s income and credit history can reduce the lender’s risk and improve your chances of approval.
Co-signers are typically family members or close friends who agree to take on joint responsibility for the mortgage if you’re unable to make payments.
7. Consider a Stated Income Mortgage
A stated income mortgage allows you to declare your income without traditional proof like T4s or NOAs. Instead, you provide supporting documents such as:
- Contracts for upcoming work.
- Letters from clients verifying your income.
- Invoices or payment histories.
This type of mortgage is ideal for self-employed individuals who have strong earning potential but lack a full income history.
Final Thoughts
Getting a mortgage when you’ve been self-employed for less than a year requires creativity and preparation, but it’s far from impossible. By leveraging your previous income, working with flexible lenders, and presenting a strong financial case, you can secure the mortgage you need to buy your home.
Still have questions or need personalized guidance? Contact us today to explore your mortgage options and get expert advice tailored to your unique situation.
