How to Get Self-Employed Clients Approved
Self-employed borrowers represent one of the biggest opportunities for mortgage brokers — and one of the biggest challenges. These clients often get turned away by their bank, which is exactly why they need a broker.
Why Self-Employed Deals Are Complex
Self-employed borrowers face unique challenges:
- Declared income is usually lower than actual income (tax optimization)
- Income varies year to year (especially contractors)
- Most A-lenders require 2 years of T1 Generals and NOAs
- TDS/GDS ratios often fail with declared income
- Different lenders treat self-employed income differently
The Three Income Verification Approaches
1. Full Documentation (A-Lenders)
- 2 years of T1 Generals with NOAs
- Business financial statements
- Use declared (line 150) income
- Best rates, strictest qualification
- Client must have strong declared income
2. Stated Income (B-Lenders)
- "Reasonable" stated income based on occupation
- 2 years in same business required
- No T1 verification (or minimal)
- Rates 1-3% higher than A-lenders
- Lender fees: 0.5-2%
3. Bank Statement Programs
- 12-24 months of business bank statements
- Income derived from deposits
- Growing availability in Canadian market
- Middle ground between full doc and stated
The Challenge: Finding the Right Lender
Every B-lender has different criteria for self-employed borrowers:
- Minimum years in business (1-3 years depending on lender)
- Acceptable business types
- Maximum LTV (65-80% for stated income)
- GDS/TDS flexibility (some go to 50%)
- Geographic restrictions
- Minimum credit score
Manual approach: Call 3-4 B-lenders you know. Takes 2-3 hours. Miss lenders that would have offered better terms.
BIPS approach: Enter the scenario once, test against 40+ lenders including all B-lenders and credit unions. Find every qualifying option in 2 minutes.
Real Example
Client: Plumber, 3 years self-employed, declared income $65K (actual ~$120K), purchasing $650K semi in Brampton ON, 15% down, 680 credit.
Manual result: Broker checks 4 known B-lenders, finds 2 that accept the deal.
BIPS result: Tests all 40+ lenders, finds 7 qualifying lenders including 2 credit unions with better rates and lower fees than the B-lenders the broker would have checked.
Client savings: 0.75% lower rate = $4,800/year in interest savings.
Tips for Self-Employed Deals
- Always run BIPS first — you'll be surprised which lenders accept the deal
- Check both stated income and full doc paths — if T1 income works for any lender, the rate will be better
- Credit unions are underrated — many have flexible self-employed programs
- Down payment matters more — higher down payment opens more lenders
- 2 years minimum — very few lenders accept less than 2 years in business
The Bottom Line
Self-employed deals are where brokers earn their commission. The broker who checks more lenders finds better options. BIPS (bips.ca) makes it possible to check all 40+ Canadian lenders for every self-employed scenario in under 2 minutes.
Try it free: bips.ca/register