Streamlining the Home Financing Process for Self-Employed Borrowers
CMHC offers mortgage loan insurance options for self-employed borrowers with traditional third party validation of income.
Presentation — For Borrowers With Traditional Third Party Validation of Income
Benefits of CMHC Self-Employed
Access to Homeownership
With a minimum down payment of 5%.
Competitive Interest Rates
Access to CMHC-insured financing, and as a result, competitive interest rates.
Availability
Products and services available coast-to-coast-to-coast.
Features
- Available for purchase, refinance and improvement.
- Flexible financing options — single advance and progress advances are available.
- Interest rate types include: Fixed, capped and standard variable, and adjustable.
- Self-employed borrowers with documentation to support their income have access to all existing 1 – 4 unit CMHC Mortgage Loan Insurance products subject to the same product criteria and insurance premiums as salaried borrowers.
- CMHC homeowner mortgage loan insurance is available to a maximum of one property (1 – 4 units) per borrower/co-borrower at any given time.
- CMHC offers mortgage loan insurance premium refunds for homeowners who purchase an energy-efficient home or make energy-saving renovations to an existing home. See CMHC Green Home for more information.
Product Highlights:
Loan Purpose
Purchase, refinance, purchase or refinance with improvements, single and progress advances.
Loan-to-Value (LTV) Ratio
Purchase : up to 95% LTV (1 – 2 units)
up to 90% LTV (3 – 4 units)
Refinance: up to 80% (1 – 4 units)
Down Payment
Traditional* and Non-Traditional** Sources
Number of Units/Occupancy
1 – 4 units
Maximum Amortization
25 years
Maximum Purchase Price
Maximum purchase price or as-improved property value must be below $1,000,000.
Borrower Eligibility
Permanent residents including newcomers to Canada. Non-permanent residents are limited to a 1 unit owner-occupied property and a maximum LTV of 90%.
Income taxes must be paid and up to date.
Approved Lenders are to verify, prior to submitting an application to CMHC, that the borrower(s) does not have existing CMHC-insured homeowner financing.
Lender Requirements
Borrower’s Notice of Assessment, audited financial statements or review engagement financial statements prepared by practising accountant. Income determined by averaging the income of the previous two year period or using most recent year if income has increased year over year for 4+ years. Confirmed NOA income can be grossed up 15%.
Employment Requirements
Minimum 2 years in same type of work, even if not in a self-employed capacity.
General Guideline for History of Managing Credit*** (Credit Score)
LTV > 80%: Recommended minimum score of 600
LTV 60.01 - 80%: Minimum score of 580
LTV ≤ 60%: No minimum score required
Debt Service Guideline***
Credit score: GDS/TDS: < 680 : 35% / 42%, 680+ : 39% / 44%*
*Debt service flexibilities are based on an assessment of the strength of the overall application.
Satisfying the minimum credit score alone does not automatically entitle the borrower to debt service flexibilities.
Loan Security
First Mortgage, Second Mortgage (Refinance) or Chattel Mortgage
| Applicable Premiums (Owner-occupied properties) | Surcharge |
|---|
| Loan to Value Ratio | Premium on Total Loan Amount | Premium on Increase to
Loan Amount for Refinance |
Blended Amortization
Refinance**** 0.60%
|
|---|
| Up to and including 65% | 0.60% | 0.60% |
| Up to and including 75% | 0.75% | 2.60% |
| Up to and including 80% | 1.25% | 3.15% |
| Up to and including 85% | 1.80% | N/A |
| Up to and including 90% | 2.40% | N/A |
| Up to and including 95% | | |
| Traditional Down Payment* | 3.15% | N/A |
| Non-Traditional Down Payment** | 3.35% | N/A |
