SlideShare a Scribd company logo
“Being SELF EMPLOYED… Your reporting income is
LOW …Here is HOW to get the mortgage you want”
DLC GLM Mortgage Group
“Here we go…”
•

Determining if you are Self Employed (BFS)

•

Determining your type of Self Employment (BFS)

•

Determining if I need Stated Income?

•

Insurers and Lenders Guidelines?

•

The Nuts and Bolts…

•

Lasting thoughts
Determining if you are Self Employed (BFS)

Determining Self Employment (BFS)
• Two questions will determine if you are “EMPLOYED”
or “SELF EMPLOYED”?
• Where do you work?
• Who pays your taxes when you get paid?

Employed
• You don’t

Self Employed
• You do
Determining your type of Self Employment (BFS)
• Sole Proprietor
“a business entity that is owned and run by one
individual”
• Incorporation
“a business operation that declares the business as
a separate legal identity”
• Limited Company
“a type of company that offers limited liability or
legal protection for its shareholders but places
restrictions on its ownership thru bylaws and
regulations to prevent hostile takeovers”
Determining if I need to use Stated Income
• Can I “INCOME QUALIFY”
• 2 year average (line 150) NOTICE OF ASSESSMENTS
(NOA)
• Gross up to 20%
• Declining current year
• Is it more than 15% decline
• 2 year average - T1 GENERALS
• Utilizing ADDBACKS
• Depreciation
• Capital Cost Allowance
• Motor Vehicle
• Home Expense
• 2 year FINACIAL STATEMENTS
• Utilizing ADDBACKS
Determining if I need to use Stated Income
• What is “STATED INCOME”
“STATING” your income to be REASONABLE and to
reflect the time you have been working within that
industry
• For what type of mortgages can I use “STATED
INCOME” for
• Refinance
• Purchase of primary residence
• Purchase PLUS improvements of primary
residence
• Purchase/Refinance of investment properties
• Lender specific
• “A” lenders
• “B” lenders
State Income Options – the Insurer’s Guidelines
CMHC SIMPLIFIED
• Permanent Resident of CANADA
• Max of 2 “units” (doors)
• BFS for less than 3 years
• Working previously in the same industry for 2
years
• No Commissioned sales
• Established CANADIAN Credit
• Credit (beacon) Score
• 620
• Requires +20% down payment
• 650
• Requires -20% down payment
State Income Options – the Insurer’s Guidelines
CMHC SIMPLIFIED
• Established CANADIAN Credit – con’t
• GDS/TDS - RATIOS
• +680
• 39/44
• -680
• 35/42
• 2,2,2 rule
• Up to 2 years with no late payments
• Min of 2 “trade lines”
• Min 2K dollar credit limit
• No former bankruptcies
• No mortgage delinquencies
• NO PERSONAL TAXES OWING
• DOWN PAYMENT
• 10%
• Own Resources
State Income Options – the Insurer’s Guidelines
CMHC SIMPLIFIED
• AMMORTIZATION
• Up to 35 years
• Pending on Down Payment (DP)
• Pending on Lender
• LOAN AMOUNT
• MAX 750K major urban areas
• MAX 600K rest of CANADA
• DOCUMENTATION to PROVE BFS
• Business License
• HST/GST Remittance Forms
• Articles of Incorporation
• Business Account
• T1 GENERALS
• FINANCIAL STATEMENTS
State Income Options – the Insurer’s Guidelines
CMHC SIMPLIFIED
• PRICING - RATE PREMIUMS
• 10% Down Payment (90% LTV)
• 4.75% of loan amount (LA)
• 15% DP (85% LTV)
• 2.9% of LA
• 20% DP (80% LTV)
• 1.64% of LA
• 25% DP (75% LTV)
• 1% of LA
• 35% DP (65% LTV)
• .8% of LA
• +35% DP (65.01% LTV)
• NO PREMIUM charged
State Income Options – the Insurer’s Guidelines
GENWORTH - ALT A
What’s the difference…
• BFS for min of 2 Years
• Can get “exceptions”
• Based on the strength of the file
• Down Payment
• 10% down
• 5% from OWN RESOURCES
• 5% can be GIFTED
• Immediate Family Member
• Proof of BFS for more than 2 years
State Income Options – the Insurer’s Guidelines
CANADA GUARANTY – LOW DOC Program
What’s the difference
• BFS for min of 2 years
• Can get “exceptions”
• Based on strength of the file
• Down Payment
• 10% down
• 5% from OWN RESOURCES
• 5% can be GIFTED
• Immediate family member
• Sign STAT DEC
• States that there are NO TAXES owing
• Do not have to show NOA
• Sign an INCOME ATTESTATION
• Confirming income on the file is being earned
Here’s the nuts and bolts of it….
• Work with a professional who specializes in
STATED INCOME
• They will understand
• Lenders requirements
• Insurer requirements
• Documents
• that one will need
• To provide to the lender
• How to position/structure the file
• Debt servicing
• Non subject properties
• Path of least resistance
• Get you the sharpest rates
• Rate premiums
• Lender specific
Lasting words….
• If you have a company
• DO NOT let it dissolve
• Resurrect in if its inactive
• Create a website
• This will give you financing options
• Get your DP in order
• Be able to show a 90 day history
• remember 5% can be GIFTED
• Pending on the insurer
• Establish your credit
• Address its concerns
• Be EDUCATED
“Lasting Quote….”
“Lack of direction, not lack of time, is the problem.
We all have 24 hour days…”

Zig Ziglar
“GLM Mortgage Group - Geoff Lee”
Co founder and Director of the Imani Orphan Care Foundation
• www.imaniorphancare.com

Over 15 years of real estate experience & Real Estate Investor
Member of
• Better Business Bureau
• Chamber of Commerce
• Mortgage Brokers Association of British Columbia
• Canadian Association of Accredited Mortgage Professionals
Mortgage educator/key note speaker …
• Wealthy Investment Network
• Business Network International
Regularly sourced for mortgage insights by the …
• Vancouver Sun
• Mortgage Broker News
Ranked amongst the top 3% mortgage brokers in Canada by CMP
magazine
Contact Information
www.geoffleemortgage.com
Twitter: @geoffleeca

LinkedIn:

http://ca.linkedin.com/in/geoffleemortgage/

Email: geoff@geoffleemortgage.com
Phone: 1.778.552.3489

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Stated Income, Being Self Employed and Trying to Get Financing When You Are Reporting Income

  • 1. “Being SELF EMPLOYED… Your reporting income is LOW …Here is HOW to get the mortgage you want” DLC GLM Mortgage Group
  • 2. “Here we go…” • Determining if you are Self Employed (BFS) • Determining your type of Self Employment (BFS) • Determining if I need Stated Income? • Insurers and Lenders Guidelines? • The Nuts and Bolts… • Lasting thoughts
  • 3. Determining if you are Self Employed (BFS) Determining Self Employment (BFS) • Two questions will determine if you are “EMPLOYED” or “SELF EMPLOYED”? • Where do you work? • Who pays your taxes when you get paid? Employed • You don’t Self Employed • You do
  • 4. Determining your type of Self Employment (BFS) • Sole Proprietor “a business entity that is owned and run by one individual” • Incorporation “a business operation that declares the business as a separate legal identity” • Limited Company “a type of company that offers limited liability or legal protection for its shareholders but places restrictions on its ownership thru bylaws and regulations to prevent hostile takeovers”
  • 5. Determining if I need to use Stated Income • Can I “INCOME QUALIFY” • 2 year average (line 150) NOTICE OF ASSESSMENTS (NOA) • Gross up to 20% • Declining current year • Is it more than 15% decline • 2 year average - T1 GENERALS • Utilizing ADDBACKS • Depreciation • Capital Cost Allowance • Motor Vehicle • Home Expense • 2 year FINACIAL STATEMENTS • Utilizing ADDBACKS
  • 6. Determining if I need to use Stated Income • What is “STATED INCOME” “STATING” your income to be REASONABLE and to reflect the time you have been working within that industry • For what type of mortgages can I use “STATED INCOME” for • Refinance • Purchase of primary residence • Purchase PLUS improvements of primary residence • Purchase/Refinance of investment properties • Lender specific • “A” lenders • “B” lenders
  • 7. State Income Options – the Insurer’s Guidelines CMHC SIMPLIFIED • Permanent Resident of CANADA • Max of 2 “units” (doors) • BFS for less than 3 years • Working previously in the same industry for 2 years • No Commissioned sales • Established CANADIAN Credit • Credit (beacon) Score • 620 • Requires +20% down payment • 650 • Requires -20% down payment
  • 8. State Income Options – the Insurer’s Guidelines CMHC SIMPLIFIED • Established CANADIAN Credit – con’t • GDS/TDS - RATIOS • +680 • 39/44 • -680 • 35/42 • 2,2,2 rule • Up to 2 years with no late payments • Min of 2 “trade lines” • Min 2K dollar credit limit • No former bankruptcies • No mortgage delinquencies • NO PERSONAL TAXES OWING • DOWN PAYMENT • 10% • Own Resources
  • 9. State Income Options – the Insurer’s Guidelines CMHC SIMPLIFIED • AMMORTIZATION • Up to 35 years • Pending on Down Payment (DP) • Pending on Lender • LOAN AMOUNT • MAX 750K major urban areas • MAX 600K rest of CANADA • DOCUMENTATION to PROVE BFS • Business License • HST/GST Remittance Forms • Articles of Incorporation • Business Account • T1 GENERALS • FINANCIAL STATEMENTS
  • 10. State Income Options – the Insurer’s Guidelines CMHC SIMPLIFIED • PRICING - RATE PREMIUMS • 10% Down Payment (90% LTV) • 4.75% of loan amount (LA) • 15% DP (85% LTV) • 2.9% of LA • 20% DP (80% LTV) • 1.64% of LA • 25% DP (75% LTV) • 1% of LA • 35% DP (65% LTV) • .8% of LA • +35% DP (65.01% LTV) • NO PREMIUM charged
  • 11. State Income Options – the Insurer’s Guidelines GENWORTH - ALT A What’s the difference… • BFS for min of 2 Years • Can get “exceptions” • Based on the strength of the file • Down Payment • 10% down • 5% from OWN RESOURCES • 5% can be GIFTED • Immediate Family Member • Proof of BFS for more than 2 years
  • 12. State Income Options – the Insurer’s Guidelines CANADA GUARANTY – LOW DOC Program What’s the difference • BFS for min of 2 years • Can get “exceptions” • Based on strength of the file • Down Payment • 10% down • 5% from OWN RESOURCES • 5% can be GIFTED • Immediate family member • Sign STAT DEC • States that there are NO TAXES owing • Do not have to show NOA • Sign an INCOME ATTESTATION • Confirming income on the file is being earned
  • 13. Here’s the nuts and bolts of it…. • Work with a professional who specializes in STATED INCOME • They will understand • Lenders requirements • Insurer requirements • Documents • that one will need • To provide to the lender • How to position/structure the file • Debt servicing • Non subject properties • Path of least resistance • Get you the sharpest rates • Rate premiums • Lender specific
  • 14. Lasting words…. • If you have a company • DO NOT let it dissolve • Resurrect in if its inactive • Create a website • This will give you financing options • Get your DP in order • Be able to show a 90 day history • remember 5% can be GIFTED • Pending on the insurer • Establish your credit • Address its concerns • Be EDUCATED
  • 15. “Lasting Quote….” “Lack of direction, not lack of time, is the problem. We all have 24 hour days…” Zig Ziglar
  • 16. “GLM Mortgage Group - Geoff Lee” Co founder and Director of the Imani Orphan Care Foundation • www.imaniorphancare.com Over 15 years of real estate experience & Real Estate Investor Member of • Better Business Bureau • Chamber of Commerce • Mortgage Brokers Association of British Columbia • Canadian Association of Accredited Mortgage Professionals Mortgage educator/key note speaker … • Wealthy Investment Network • Business Network International Regularly sourced for mortgage insights by the … • Vancouver Sun • Mortgage Broker News Ranked amongst the top 3% mortgage brokers in Canada by CMP magazine