Tax Filings, Pre-Approvals & Qualifying Income
If you are self-employed, and are at the point where you are deciding how much to T4 yourself or how much to declare as a dividend, for qualifying purposes, it is best if you declare as much as you did the previous year, or higher.
When you are self-employed, lenders like to see a 2-year history of your earnings. If your most recent filed year is higher than the previous year, then they will use an average. If the most recent filed year is lower than the previous, they will use the lower figure.
If you were pre-approved towards the end of the year, or early in the new year, and end up purchasing or refinancing after the tax filing deadline of April 30th, you should check in to see if the amount you were previously qualified for, has changed.
There are a few lending policies and programs in place to assist self-employed borrowers. Having your tax returns filed on time, and with any taxes owing paid in full, will help you when arranging your mortgage. Feel free to reach out any time with any questions.
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