Residential Mortgages - Stated Income / Self Employed Borrowers

In this episode of the Close More Deals Podcast, host Scott Dillingham breaks down two powerful mortgage programs designed specifically for self-employed borrowers and those with non-traditional income. These alternative mortgage solutions help clients who struggle to qualify through conventional lending channels secure the financing they need. Scott explains the 10% down insured stated income program and the 20% down bank statement program—both proven strategies for closing more deals with clients who face income verification challenges.

The first program Scott discusses is the insured stated income mortgage option, which requires just 10% down. This program works through mortgage default insurers including CMHC, Sagen, and Canada Guaranty, allowing mortgage lenders to approve borrowers based on reasonable stated income rather than tax returns alone. Scott shares a recent success story involving a truck driver whose tax return showed only $13,000 in declared income but was approved for $70,000 stated income—a figure validated through industry income tools. The insurer verified this was reasonable compensation for a truck driver and approved the mortgage, enabling a purchase that traditional lenders had denied. This approach is particularly valuable for self-employed individuals, contractors, and commission-based workers who write off substantial business expenses, resulting in artificially low net income on their notice of assessment.

The second program focuses on bank statement mortgages for borrowers with 20% or more down payment. Rather than relying solely on what clients report to the Canada Revenue Agency, this alternative income verification method examines 12 months of business bank statements to calculate actual income. Lenders review all deposits and intelligently subtract legitimate business expenses—like fuel costs for the truck driver example—to determine net available income for mortgage qualification. This bank statement program proves especially effective for cash-based businesses, gig economy workers, and entrepreneurs whose business financials don't fully reflect their capacity to service mortgage debt. Both programs fall under B lender mortgage solutions, which means slightly higher interest rates and lender fees (typically around 2% of the mortgage amount), but they provide critical pathways to homeownership for those with strong income but non-traditional documentation.

Understanding self-employed mortgage requirements is essential for real estate professionals and mortgage brokers working with entrepreneurial clients. Traditional mortgage qualification criteria penalize business owners for smart tax strategies, but these stated income and bank statement alternatives recognize the reality of self-employment income. The insured 10% down program offers the best mortgage rates available since it's backed by mortgage insurance, making it an attractive option for first-time buyers and those with limited savings. Meanwhile, the 20% down bank statement program provides more flexibility for established business owners with substantial equity. Scott emphasizes that lenders use tools similar to employment websites to verify that stated income aligns with industry standards—ensuring reasonable income claims while avoiding the rigid requirements that cause traditional bank rejections.

For real estate professionals, mastering these alternative mortgage programs means being able to serve a much broader client base. Self-employed mortgage lenders who understand these products can help contractors, freelancers, real estate investors, and small business owners achieve their homeownership and investment goals despite showing lower taxable income. The key is recognizing when clients need these specialized solutions: multiple bank declines, high write-offs reducing net income, cash income streams, or less than two years in business. By positioning these mortgage loan options as solutions rather than last resorts, mortgage brokers can close deals that competitors miss while building lasting client relationships. Scott's practical examples demonstrate how understanding income verification alternatives transforms challenging files into successful mortgage approvals, ultimately helping more Canadians access home financing regardless of how they earn their income.

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