For homeowners whose income does not show on paper
Income that is hard to prove does not always mean a closed door. Here is how the equity-based route works.
Banks start with your income and work backward to a loan. Some alternative and private lenders start with the property instead. That can help retirees, business owners and people between jobs, but it comes with higher costs and a shorter runway. Here is how it works and what to check first.
You've started an application.
Saves as you go · No credit check · A licensed mortgage professional follows up
How lenders look at no-income / stated income borrowers
1Most banks need proof of income. Some alternative and private lenders may lend with limited or stated income when there is strong equity in the home, clear title and a believable plan to repay or refinance.
2The amount depends mainly on the property: its value, location and condition, and what is already owed on it. Lenders commonly cap the combined loan at a share of the home value, and your credit is still reviewed.
3Expect higher interest, lender and broker fees, and a shorter term, often one to two years. Choosing this route without an exit plan is the most common way it goes wrong.
4Showing even partial income, such as bank statements, a pension letter or a notice of assessment, can improve your options and your rate. Nothing here is guaranteed, and every approval is subject to the lender.
Get ready
What lenders will ask you for
Government photo ID for every borrower
Your latest property tax bill and proof of home insurance
Your current mortgage statement and any line of credit statements on the home
Whatever income evidence you do have: bank statements, pension or investment statements, notices of assessment, contracts or invoices
Your credit report, which you can request from Equifax or TransUnion, so there are no surprises
Your options
Which kind of lender fits you
Option 1
Equity-based loan from an alternative or private lender
Looks mainly at the value of the home and your equity. Faster and more flexible, with higher rates and fees.
Option 2
Stated-income or bank-statement mortgage
For self-employed people and commission earners: lenders use deposits and your stated income instead of tax returns. Rates are usually between bank and private pricing.
Option 3
Co-borrower or guarantor with provable income
A family member with documented income may help you qualify for a regular mortgage at a lower rate.
Option 4
Wait and document
If you can wait one tax season, filing and showing income for a full year can open lower-cost lenders.
Avoid these
Common mistakes
!Borrowing more than you need. On this kind of loan every extra dollar costs more interest and larger fees.
!Having no exit plan. Decide up front whether you will sell, refinance to a bank once your income is documented, or repay from savings.
!Ignoring the full cost. Add lender fees, broker fees, legal and appraisal to the interest rate before you compare offers.
!Overstating income on any form. Lenders verify what they can, and a false statement can void the loan.
Take action
Your first steps
1Write down why you need the money, how much, and how you plan to pay it back or refinance.
2Gather the income evidence you have, even if it is partial, plus ID, tax bill and mortgage statement.
3Check your credit report and fix any errors before a lender sees it.
4Start the intake so a broker can compare banks, alternative lenders and private lenders for your situation.
5Review the written cost disclosure and get independent legal advice before you sign.
The intake
What your application will ask
Your online application goes one topic at a time and saves every answer and document as you go, so you can stop and come back. It never runs a credit check, and a licensed mortgage professional reviews it and follows up.
For no-income / stated income borrowers
What is the home worth, where is it (city and type of home), and what is owed on it today (first mortgage, line of credit, anything else)?
How do you earn money now, and what can you show: bank statements, pension, investments, contracts?
How much do you need, what is it for, and how soon?
How do you plan to repay or refinance: selling, a bank mortgage once income is documented, or savings?
Plus the basics everyone answers 13
Your full name, email, mobile number and the best time to call.
The city you live in, and whether you are a Canadian citizen, permanent resident, or other status.
Are you applying alone or with someone else? If with someone, their name and how you are related.
Your goal: buy, refinance, renew, take out equity, or consolidate debt?
The property type (house, condo, multi-unit) and the city it is in.
Will you live in it, rent it out, or both?
The purchase price or estimated value, and your target closing or renewal date.
Your down payment or available equity, and where it comes from (savings, RRSP/FHSA, a gift, sale of another property).
Your approximate yearly household income before tax.
Your monthly debt payments: car loans, credit cards, lines of credit, student loans, support payments.
Your own estimate of your credit score: excellent, good, fair, poor, or not sure.
In the last 7 years, any bankruptcy, consumer proposal, collections, or missed mortgage payments?
May the broker contact you? (A credit check is only ever run later, with your separate written consent.)
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Answers
Questions people ask
Can I really get a mortgage with no income in Ontario?
Some alternative and private lenders may lend with limited or stated income when there is enough equity and clear title. It is not available from most banks, it is never guaranteed, and it costs more than a conventional mortgage.
How much could I borrow?
It depends on the home and lender. Lenders commonly cap the combined loan, your existing mortgage plus the new one, at a percentage of the home value. A broker can give you a realistic range once the property and balances are known.
Will my credit score stop me?
Credit is still reviewed. With strong equity, some lenders are more flexible on credit, but a weaker score usually means a higher rate and larger fees.
Is this a long-term solution?
Usually not. Most of these loans are one to two years. The plan is normally to refinance to a lower-cost lender once income is documented, or to sell.
What does it cost?
Expect a higher interest rate than a bank, a lender fee, a broker fee, plus legal and appraisal costs. A broker must give you a written disclosure of costs before you commit, so you can compare offers.
Does starting the intake affect my credit?
No. It is only questions. A credit check, if needed, comes later and only with your permission.
General information, not mortgage, legal or tax advice. Lender rules change and every application is reviewed on its own facts. Your application and documents are stored privately and go only to a licensed mortgage professional at Top Mortgages Inc; they are never sold, and no credit check is run without your separate written consent.