Date: February 14, 2024

In recognition of Valentine’s Day and love, today, we will continue with more information for those of you who love what you do so much that you decided to embrace self-employment.

If you have not read last week’s DYK- Mortgage Minute, go back and read it or click here.

Now that you understand the different types of self-employed income, let’s explore this further.

It’s commonly understood that accountants and mortgage brokers always work in harmony toward your financial goals. While both work to optimize your finances, often, we find ourselves at odds due to conflicting objectives, particularly regarding income declarations and mortgage qualifications.

Accountants excel at minimizing tax liabilities, which clients appreciate for tax savings and business growth. However, this approach can clash with mortgage applications, where lenders prioritize higher net incomes to secure favourable rates.

The dilemma is straightforward: You’re caught between paying the taxman and mortgage lender. This means choosing between declaring higher income for a lower mortgage rate, potentially increasing tax payments, or declaring lower income and accepting a higher mortgage interest rate.

It’s crucial to start your mortgage conversation early when you are self-employed so we can discuss what type of income you currently declare and what you should be declaring based on your future goals and focus.

Are you focused on a low monthly payment? Then we need you to likely declare more income, which will mean more taxes for two years, but then smooth sailing.

If you plan on buying a home but likely want to move in 3 years, then your strategy may be slightly different.

Things to think about: most people think that because they pay themselves or their family members a T4 from THEIR company, the lender will use this as a full-time income, but that is not the case. Most lenders will want to see a two-year history of your personal income tax filings to provide proof of income. Lenders are looking for consistent income.

Example: In 2021, you earned $50,000 and paid yourself T4 income; then, in 2022, you earned $75,000 in T4 income. The lender would look at this, and your income would average out to $62,500. Let’s assume your income goes down, and 2021 was $75,000 and 2022 was $50,000; then, we would only be able to use $50,000 as your income since your income went down year over year. FYI, the lender would also ask to see your T1 Generals and Notice of Assessments for those same years. Since this is T4 income, we don’t have to talk about net vs gross.

Now, let’s assume you are incorporated and pay yourself in dividends or a combination of dividends and T4 income. Here, the lender will want to see the T1 Generals and Notice of Assessments for the past two years. Again, the lender is focused on Line 15000. They are not necessarily looking at gross income; they are looking at net income.

I want to make sure that I touch on the fact that there are options when you declare a lower income. However, your mortgage will likely be placed with an alternative lender, meaning a higher interest rate. These types of lenders normally require a minimum 20% down payment and oftentimes have a lender fee, but there are options.

The moral of today’s update is if you are self-employed or considering self-employment, please connect with us and let us help you plan a future strategy, as there are too many to list here.

Click here to book a time. 

Talk soon, 


Mortgages can be complicated; we are here to help you make “cents” of it.

We focus on Mortgage Solutions, Period!

To learn more connect with Ana Cruz 905.870.0513 or email at