- Posted by HomeHow
- On November 16, 2018
- 0 Comments
- whether you are employed or self-employed
- the consistency of your income: whether you earn the same or a different amount on every paystub
- the duration of your employment
I am self-employed, now what?
Lenders will require more information from you if you are a self-employed. For example, if your business is making income that does not show on your tax filing, you may need to disclose some of your books as well. Lenders will then apply some calculations to determine your borrowing power.
Mortgage lenders will also require you to prove a steady business income for at least 2 years prior to applying.
There could be more complications if you are a self-employed individual. At HomeHow, our job is to simplify this process for you so that you can still focus on your business, while you are making a big purchase decision.
My income varies from pay cheque to pay cheque
Lenders perceive predictable types of income such as commissions, bonuses, overtime pay, self-employment, or part-time/seasonal employment as less stable. Besides pay stubs and letter of employment, lenders will also need to see your tax return and/or your Notice of Assessment.
Lenders will also apply some calculation to determine your borrowing power using an average of your earnings over a period of time.
Recent job changes
So long as you are able to provide the necessary paperwork, most job changes won’t adversely affect your mortgage application. In particular, if you have a pay raise and move up within your industry or if you have a history of employment with a similar pay structure in the same industry, you shouldn’t come across any issues in this respect.
Usually, lenders a more conservative approach in assessing your borrowing power if the job change involves:
- a change to less predictable income (bonus or commission base)
- change to a completely different industry or position
- change jobs too frequently