October 5, 2018

CMHC Rule Changes For The Newly Self Employed

If you’re newly self-employed, obtaining financing may have just become easier.

We caught up with leaders from the Canada Mortgage & Housing Corporation to learn more about changes that may open doors for self-employed Canadians seeking financing. We’re happy to hear it, because approximately 3 million Canadians (and counting) fit into the category of “self-employed”. Lending guidelines make it hard for this segment to be given a fair chance at obtaining financing, despite often having the means.

The changes are part of the Federal Government’s Canadian Housing Strategy, a ten-year, $40 billion-dollar initiative. The sub-group being targeted by the changes are those that have been self-employed for less than two years and require mortgage loan insurance.

In a nutshell, the changes allow the newly self-employed to be considered for financing through amore holistic, “common sense” lens:

• Business history – did the individual acquire an established business?
• Cash reserves – are adequate cash reserves in place? Is cash flow sustainable and predictable?
• Education and training – what kind of background and skill set does the individual possess? How is this experience relevant to their venture?
• More flexible documentation requirements – Use of Notices of Assessment (NOAs) and Statement of Business or Professional Activities (T2125) to assess earnings instead of audited financial statements
• New add backs – depreciation, bank fees, and other standard business expenses can be “added back” to gross-up the individual’s net income

Our team has been helping self-employed Canadians obtain financing for years, including the newly self-employed. Book a meeting with us to better understand how these changes could positively impact your financing situation.

To read more about the National Housing Strategy, check out: https://www.cmhc-schl.gc.ca/en/nhs

You Dream It. We Finance It.