At Seven Lending, we know that the way people work in British Columbia is changing. More people are choosing to be their own boss. Whether you are a graphic designer in Vancouver, a software developer in Victoria, or a writer in Kelowna, being a freelancer gives you freedom. However, that freedom can feel like a hurdle when you want to buy a home.
Traditional banks often have a hard time understanding freelancer income. They like “steady” paychecks from a big company. If you don’t have that, they might say no. But at Seven Lending, we believe your income is real, even if it doesn’t come from a standard boss. This guide will show you exactly how to verify your income and get the home loan you deserve.
How Do Freelancers Verify Income For A Home Loan In Bc?
Freelancers can verify income using three main methods:
- Traditional Method: Providing the last two years of your Notice of Assessment (NOA) from the CRA.
- Stated Income Method: Showing 6 to 12 months of bank statements to prove your gross monthly deposits.
- Asset-Based Method: Using the equity in your property or a large down payment to secure a loan without standard income papers.
If the big banks have turned you down, a no-income verification mortgage in Canada might be the perfect solution for your situation.
Why Traditional Banks Struggle with Freelancers
Most big banks use a simple math formula. They look at the “Net Income” on your tax returns. As a freelancer, you likely have many legal business expenses. You might write off your home office, your internet, and your travel.
While write-offs are great for paying less tax, they make your income look smaller to a bank. If you earned $100,000 but had $40,000 in expenses, the bank only “sees” $60,000. This often isn’t enough to buy a home in BC’s competitive market.
Proving Your Income as a Professional
Even if you don’t have a traditional paystub, you can still prove you make good money. At Seven Lending, we look at the “Gross Income” (the total money coming in) rather than just the “Net Income” (what is left after taxes).
To get ready for a self-employed mortgage, you should gather these documents:
- Bank Statements: Keep 12 months of statements that show your clients paying you.
- Signed Contracts: If you have a long-term contract with a client, this shows your income will continue.
- Invoices: A clean record of your billing shows you run a professional business.
The “Stated Income” Solution
If your tax returns don’t tell the whole story, we offer “Stated Income” programs. This means we review your bank deposits to determine what you actually earn. This is very helpful for freelancers who have a lot of business expenses.
If you have been freelancing for less than two years, most banks will automatically decline you. We don’t. We focus on your industry experience. If you were doing the same work as an employee before you went freelance, we count that time. This is a key part of how we provide alternative financing to BC workers.
Private Lending: A Path for Every Freelancer
Sometimes, a freelancer’s financial situation is a bit more complex. Maybe you had a slow year, or maybe your credit score isn’t perfect yet. This is where private mortgage lenders in BC come in.
Private lenders are different from banks. They care more about the value of the home and your down payment than they do about your tax returns. Many freelancers use a private loan to get into their home now. Then, after a year or two of building a stable record, they switch to a lower-rate bank loan. You can check current private mortgage rates to see how this fits your budget.
What About Credit Scores?
A high credit score helps, but it isn’t the only thing that matters. We know that building a business can sometimes lead to credit card debt or missed payments. If your credit isn’t in the 700s, we can still help. We offer a specific bad credit mortgage for freelancers who have the income but need a second chance with their credit history.
Using Equity to Your Advantage
If you already own a home and want to use its value to buy a new place or grow your freelance business, you have options. You can use our tools to see how much you can borrow against your house.
By using a home equity loan, you can access cash based on your home’s value in cities like Vancouver or Surrey. This is often much easier than trying to get a traditional personal loan as a freelancer.
Steps to Take Before Applying
To make your home loan application as strong as possible, follow these simple steps:
- Separate Your Money: Have a separate bank account for your freelance work. It makes it much easier for us to see your income.
- Save a Larger Down Payment: If you can provide 20% to 25% down, your chances of approval go up significantly.
- Check Your Equity: If you are moving, use a home purchase calculator to see what you can afford.
- Talk to a Specialist: Don’t waste time at a bank that doesn’t “get” freelancers. Work with a team that understands private money lenders and alternative options.
Your Freelance Dream is Possible
Being a freelancer in BC shouldn’t stop you from owning a home. Whether you are looking for a private mortgage lender in Kelowna or a flexible loan in the Fraser Valley, Seven Lending is here to help. We look at the person and the property, not just the paperwork.
Are you ready to stop renting and start owning? You can apply now to talk to our team about your freelance income. We will help you find the right path to homeownership.