Insured stated income mortgages for self-employed borrowers in Ontario

An insured stated income mortgage is for a self-employed borrower in Ontario whose tax return shows less than the business earns, and whose mortgage will use default insurance. The stated figure is a reasonable income that the revenue, the bank statements, and the time in business can support. The insurance is what lets the down payment sit below 20%, inside that program's rules. Micky Khaneka, a licensed mortgage broker, puts that package together from the North York office.

What insured stated income means

Owners often keep personal income low for ordinary tax reasons. A sole proprietor writes off a truck, materials, and a home office. An incorporated owner takes a small salary and leaves profit in the company. The line on the notice of assessment is a tax result, not the whole business.

On an insured mortgage, stated income is the figure the program will consider when that tax line is lower than the business really earns. The notice stays in the package, next to the records that explain it. The insurance premium is a separate cost, often added to the mortgage.

What an insured program usually asks for

These programs are written for a home you will live in. The purchase price has to stay under $1.5 million.

• About two years in the business, shown with a registration, GST/HST returns, or articles of incorporation.
• The latest notice of assessment, including the total-income line.
• A stated income that fits the type of business, how long you have run it, its revenue, and the deposits.
• A clean credit history.
• At least 10% down, with part of that from your own savings. A gift from close family can cover some of the rest.

With 20% down, default insurance is not required and the income reading can be different. Commission-only income is often outside these programs. A home you will not live in is a different application. Start with self-employed mortgages, and use the self-employed document guide for the longer package.

Illustrative example

Illustrative example. A sole proprietor in Mississauga has run a service business for six years. After write-offs, the total income on the notice of assessment is about $48,000. The business account shows steady deposits, credit is strong, and 10% is saved. The home is one they will live in, priced under $1.5 million. The package keeps the notice and sets a stated income the revenue and the statements can support, with the insurance premium added to the borrowing. That sketch is an illustration. A lender still has to review it.

Documents to gather

• Two years of notices of assessment, if you have them, and the matching personal return.
• The business schedule for a sole proprietor, or the corporate statements and articles if you are incorporated.
• Twelve months of business bank statements, and the personal statements that hold the down payment.
• GST/HST returns, or a business licence or registry printout.
• The purchase agreement, once you have one.

Where to start

Bring the notice and the business statements before you waive a condition. Contact the North York office and we will say whether an insured stated-income reading fits.

Frequently asked questions

What is an insured stated income mortgage?

It pairs mortgage default insurance with a reasonable income a program can consider when your tax return shows less than the business earns. It is not a number picked to hit a payment.

Do I still need my notice of assessment?

Yes. The notice stays in the package, including the total-income line. Stated income explains the business behind that line. It does not replace the notice.

How much of a down payment should I plan for?

Plan on at least 10%, with part of it from your own savings. A family gift can cover some of the rest. The price has to stay under $1.5 million. At 20% down, this insurance is not required.

Does insured stated income mean I will be approved?

No. It is a way to present income the tax line understates, on a mortgage that uses default insurance. A lender can still decline.