Mortgage strategy for incorporated business owners in Ontario
A profitable business does not always look profitable to a lender. Lenders read salary, dividends and retained earnings differently - we show you how they will read yours and which mortgage paths fit.
It starts with a conversation, no documents or credit checks needed yet.
Gaurav Sophat · Mortgage Agent Level 2 · DLC FC Funding #10671
Same business.
Read three ways.
All can be correct. Our work is finding which lenders read it your way.
- YouWhat the business earned$420K
- Salary
- $90K
- Dividends
- $70K
- Kept in the corporation
- $260K
- A lender, first passPersonal income only$160K
- Documented on your returns
- $160K
- Not automatically counted
- —
- JarvicWhat we explore$160K + ?
- The starting point
- $160K
- Lenders & programs that may consider it. Reviewed before anyone assumes an alternative lender
- Up to $260K
Illustrative figures, not a qualification estimate. Whether any corporate income is considered depends on the lender, the program and your documents.
Which owner
are you?
Mixed situation? That's most of our clients.
The owner who keeps profit in the company
You pay yourself modestly and leave the rest in the corporation for good tax reasons.
- Where it gets stuck
- Your personal income looks small, so a bank's first offer comes in low.
- What we look at
- Whether some lenders may consider the income inside your corporation.
Mixed situation? That's most of our clients.
The fast-growing business
Revenue has climbed sharply in the last year or two.
- Where it gets stuck
- Your strongest year may be averaged with weaker ones.
- What we look at
- How the growth is documented, and when to apply.
Mixed situation? That's most of our clients.
The newly incorporated owner
You incorporated or went self-employed recently.
- Where it gets stuck
- A short history can narrow the usual options.
- What we look at
- Which lenders have paths for newer businesses.
Mixed situation? That's most of our clients.
What happens, stage by stage.
At every stage you'll know what we're doing, what we need from you, and what you walk away with.
Understand
We learn how the business earns, how you pay yourself and what you're financing, before we look at a lender.
- You
- Jarvic
- Your part
- A first conversation. We'll tell you exactly what's needed next.
- You get
- A clear objective and a short list of what we need.
Decode
We read your personal and corporate figures the way a lender would.
- You
- Jarvic
- Accountant (as needed)
- Your part
- Send what we've asked for. No more.
- You get
- A written income summary.
Navigate
We compare the lenders and programs that fit, and show you the trade-offs of each.
- You
- Jarvic
- Accountant
- Your part
- Choose a path, with your accountant where tax is involved.
- You get
- Your options, side by side.
Deliver
We prepare, submit and manage your financing, through to closing.
- You
- Jarvic
- Lawyer
- Your part
- Review, sign, and answer lender questions quickly.
- You get
- One point of contact from start to finish.
Stay Ready
We check in periodically, plan ahead of renewal, and review before big changes.
- You
- Jarvic
- Accountant (as needed)
- Your part
- Tell us when compensation or structure might change.
- You get
- Your next move, planned ahead.
Borrowing should be planned years ahead, not weeks ahead.
Changes to compensation, business structure or employment can affect what you can borrow later. So when the business changes, we start again at Understand, before the decision is made, not after.
We don't give tax or legal advice. Your accountant decides what makes sense for your business, and your lawyer handles the legal work. You make the decisions.
Business-owner
mortgage questions
A starting point for understanding your options.
Sometimes. The answer depends on the lender, the mortgage program, ownership, business history, financial results and the documentation available. Corporate profit (net income after taxes) is not automatically the same thing as personal mortgage qualifying income.
Dividend income may be considered by lenders when it can be appropriately documented and supported. The exact treatment depends on lender guidelines and the borrower's circumstances.
Two years is a common underwriting reference point, but it is not an absolute rule in every situation. Some mortgage programs provide flexibility for recently self-employed borrowers when other evidence supports the application.
That is not automatically the right solution. Changing compensation can have tax and business consequences. Before changing how you pay yourself, understand both the mortgage implications and the advice of your accountant.
Start with the situation—not the rate.
Tell us what your business looks like, what you are trying to accomplish and what you are unsure about.
“He is very knowledgeable and was able to find a good lender that fit my specific situation (recently self-employed), which really sets him apart from other brokers I met.”
A more considered next step.