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Pegasus Mortgage Lending Center Inc.

Self-Employed Mortgage with 1 Year Income — Ontario Guide

This article is for informational purposes only and does not constitute financial advice. Speak with a licensed mortgage professional before making any mortgage decisions.

Quick Answer — Yes, One Year Can Be Enough

Quick Answer

Yes, you can qualify for a mortgage in Ontario with only one year of self-employed income — but typically not through a major bank's standard A-lender channel, which usually requires two years of Notices of Assessment. The realistic paths are an insured self-employed program through Sagen or CMHC (which can accept one year of self-employment with the right profile), an alternative (B) lender using stated or declared income with at least 20% down, or, in a few cases, a short-term private mortgage to bridge to year two.

Whether an insured A-lender program, an alternative (B) lender, or a private mortgage is the right fit depends mostly on how your income is documented, how much you can put down, and your credit profile.

You Started a Business and the Bank Said "Come Back Next Year"

You're sitting across from a bank rep in a branch somewhere along Dundas Street in Mississauga, or in a Scarborough strip-mall office, and the conversation goes well right up until she asks for your Notices of Assessment. You hand over last year's — the first full year since you went out on your own — and the energy in the room shifts. "We'll need two years before we can look at a mortgage for you." You walk out feeling like you've been told you're not a real buyer yet.

If that's where you are right now, you should know this is one of the most common experiences self-employed buyers in the GTA have, and it is almost always a lender-fit problem rather than a you problem. This article explains what one year of self-employed income can and cannot do in Ontario, which lenders will actually look at your file today, and how to pick the right path based on your down payment, your credit, and how your business is set up.

1 year Minimum self-employment history for an insured program
5% Down payment possible on an insured self-employed mortgage
3 paths A-insured, B-stated, or private bridge

Quick Start: Pick Your Path in Sixty Seconds

With one year of self-employed income in Ontario, your path depends mostly on your down payment and credit score. Strong credit plus a modest down payment often points to an insured self-employed program through Sagen or CMHC. Twenty percent or more down with a declared income lower than your actual earnings usually points to an alternative (B) lender. Below that, a short-term private mortgage can bridge the gap to year two.
5–10% down · 680+ credit

Start with an insured self-employed program (Sagen or CMHC). You can qualify on one year of self-employment with the right documentation.

20%+ down · declared under actual

An alternative (B) lender's stated-income program typically fits better. Rate is higher than a bank's, but the file gets approved.

25%+ equity · credit issues

A short-term private mortgage can hold the position for 12–24 months while you build a second NOA.

None feels right yet

Pause the shopping. Get your 2026 tax return filed cleanly and request an instant pre-approval to see where you land.

Why Banks Default to the Two-Year Rule

Big banks are federally regulated and have to run every mortgage through OSFI's B-20 guideline, which includes the mortgage stress test — you have to qualify at the greater of your contract rate plus 2% or the posted benchmark rate, whichever is higher. On top of that, each lender uses debt-service ratios called GDS and TDS (Gross and Total Debt Service — the share of your gross income that goes to housing and all debts combined) to decide how much you can borrow.

To run those calculations, a bank's standard underwriting model wants two years of Notices of Assessment (NOAs — the summary the Canada Revenue Agency sends after you file your taxes) so it can average your self-employed income. One year isn't the model's problem; it's the average they can't produce. That is why the same bank that would approve a T4 employee on day one often sends a one-year self-employed applicant home. Specialty programs and other lender channels were built specifically to solve this. For more context on the terminology, see our mortgage glossary.

The Three Real Paths With One Year of Income

Most Ontario buyers in this situation end up on one of three paths. Each exists for a reason, and the right one usually becomes obvious once you look at down payment, credit and documentation side by side.

Insured self-employed programs (A-lender channel)

CMHC and Sagen both run specific self-employed programs that permit qualification with one year of self-employment, provided the applicant has strong credit, a reasonable down payment, and a demonstrated history in the same line of work (often as an employee before going independent). These are still A-lender mortgages — bank-type rates, standard amortizations, no lender fees — but underwritten under the insurer's self-employed rules rather than the bank's generic two-NOA model.

Alternative (B) lenders using stated or declared income

An alternative or B lender is a federally or provincially regulated lender that approves borrowers outside the big banks' standard income and credit rules, usually at a higher rate for a shorter term. B lenders can look at bank statements, business invoices, or declared income rather than requiring two full NOAs. They require more equity — typically at least 20% down — and charge a lender fee (often around 1% of the mortgage), but they will say yes where a bank will not. Our self-employed mortgage solutions cover both the insured-A and alternative-B pathways.

Private lenders as a short-term bridge

Private lenders are typically individual investors or Mortgage Investment Corporations that lend on equity rather than income. For a one-year self-employed buyer with meaningful equity and a clean exit plan, a private can hold the position for 12–24 months at a materially higher rate while a second NOA builds. This is a bridge, not a destination.

Pegasus Mortgage Lending
Minimum Down Payment by Lender Type
Ontario, 1-Year Self-Employed Borrower — Owner-Occupied — October 2026
A Lender (insured)
5%
Sagen or CMHC self-employed program
B Lender (stated)
20%
Alternative lenders, stated income
Private Lender
25–35%+
Short-term bridge, equity-driven
Illustrative only — not a forecast. Actual minimums vary by lender, insurer and property. Sources: CMHC (cmhc-schl.gc.ca), Sagen (sagen.ca), Pegasus internal lender matrix.
Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479

Insured Self-Employed Programs: Sagen and CMHC Explained

Insured self-employed programs through Sagen and CMHC can allow a one-year self-employed borrower in Ontario to qualify with as little as 5% down on an owner-occupied home, provided credit is strong (typically 680+) and the applicant can show prior industry experience. The insurance premium is added to the mortgage; the rate is the same bank-level rate a salaried buyer would see.

The core idea is simple: the insurer takes on the credit risk, which lets the bank approve a borrower it would otherwise decline. Both Sagen and CMHC publish self-employed program guidelines on their own sites, and the two differ slightly in documentation, maximum amounts, and the specific profile each prefers. Your broker matches the file to whichever insurer underwrites it most favourably.

Premiums for high-ratio insured mortgages (less than 20% down) are added to the principal and amortized over the life of the loan. You can estimate yours using our CMHC insurance calculator. Many Toronto and GTA buyers assume insured mortgages are off the table for self-employed applicants — a myth worth retiring.

Pegasus Mortgage Lending
Sagen vs CMHC Self-Employed Program
Canada-wide program parameters, applicable to Ontario — October 2026
Program element Sagen Business for Self CMHC Self-Employed
Minimum self-employment history Can be less than 2 years with industry experience Typically 2 years; 1 year considered with strong profile
Minimum down payment (owner-occupied) 5% on portion up to $500K; 10% on $500K–$1.5M 5% on portion up to $500K; 10% on $500K–$1.5M
Credit score (typical) 680+ 680+
Income documentation Stated or declared with supporting docs (bank statements, invoices, CPA letter) Primarily traditional (T1/NOA); stated income limited
Max purchase price (insured) Up to $1.5 million Up to $1.5 million
Max amortization Up to 30 years (first-time buyers / new builds eligible) Up to 30 years (first-time buyers / new builds eligible)
Eligible property types Owner-occupied 1–4 unit Owner-occupied 1–4 unit
Illustrative only — not a forecast. Program parameters change; confirm current rules with the insurer or your broker before relying on them. Sources: Sagen (sagen.ca/self-employed), CMHC (cmhc-schl.gc.ca).
Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479

Alternative (B) Lenders: Stated Income With Twenty Percent Down

B lenders are the workhorses of the one-year self-employed file in Ontario. They operate under the same federal or provincial oversight as A lenders, but their programs are built for borrowers whose income or credit does not fit the bank model. A stated-income program lets a self-employed borrower qualify using the income they declare — typically supported by bank statements, business invoices, a CPA letter, or a combination — rather than two years of fully filed NOAs.

The trade-off is cost. Expect a rate higher than a prime A-lender rate, usually a lender fee around 1%, and shorter terms (one to three years). Many self-employed GTA buyers use a B lender for a single term, build their second NOA, and move to an A lender at renewal. For context on the mechanics, see how B lenders look at self-employed borrowers differently.

Comparing Your Lender Options Side by Side

The three paths serve different files. A quick comparison makes the choice easier.

A Lender (insured self-employed) B Lender (alternative / stated) Private Lender (bridge)
Minimum income history 1 year 1 year, sometimes less Often none required
Minimum down payment 5–10% (owner-occupied) 20%+ 25–35%+
Credit score Typically 680+ Typically 600+ Flexible
Rate vs. prime A Similar Typically 1–2% higher Materially higher
Lender fee None typical ~1% 2–3%+
Best use Strong file, clean credit, modest down payment Good equity, declared under what you earn Short-term bridge to A or B at renewal

For the plain-English version of this split beyond self-employed files, see A lender vs B lender — the plain-English version.

Pegasus Mortgage Lending
Illustrative Monthly Payment — $800,000 GTA Home
$640,000 mortgage (20% down), 25-year amortization — GTA, October 2026
A Lender @ 5.0%
~$3,720/mo
Insured self-employed program
B Lender @ 6.5%
~$4,290/mo
Stated-income alternative
Private @ 9.0%
~$5,300/mo
Short-term bridge
Illustrative only — not a forecast. Payment figures calculated at the rates shown using Canadian semi-annual compounding on a 25-year amortization. Sources: TRREB (trreb.ca); Pegasus mortgage payment calculator (pegasuslending.com/mortgage-payment-calculator/).
Pegasus Mortgage Lending Center Inc. FSRA Lic # 11479

From First Call to Keys in Hand: A Step-by-Step Roadmap

  1. 1
    Free broker call Fifteen minutes on the phone to review your business structure, down payment, credit range, and target price. No credit check, no commitment.
  2. 2
    Document checklist You'll be asked for last year's NOA and T1 General, your current year's business bank statements, two months of personal bank statements, government ID, and — if incorporated — the most recent T2 and financial statements.
  3. 3
    Pre-approval Your broker tests the file against A-lender insured programs, B-lender stated-income programs, and (if relevant) private channels before any hard credit pull hits your bureau.
  4. 4
    House hunting You now shop with a real number instead of a hope. Our online application captures what the lender will need in one pass.
  5. 5
    Firm offer and formal approval Once you have an accepted offer, the lender reviews the property, orders an appraisal if required, and issues a commitment.
  6. 6
    Funding and closing Your lawyer handles the Ontario Land Transfer Tax (and the Toronto municipal LTT if the property is in the City of Toronto), registers the mortgage, and funds close.

Where This Depends on Your File

Honest answer: with one year of self-employed income, no two files land the same way. Five factors do the heavy lifting.

Your business structure A sole proprietor qualifies on T1 personal income. An incorporated owner's file includes T2 corporate financials plus their own T4 and dividend history, and some lenders will add back retained earnings while others will not. Two owners with the same take-home can qualify at very different amounts depending on who looks at the file.
Declared vs. actual income Many self-employed Ontarians legally minimize taxable income to manage CRA liability. A-lenders qualify on the declared line; stated-income B-lender programs and some insured programs can use gross-up or stated income. The maximum mortgage can roughly double on identical gross receipts.
Down payment size Under 20% forces an insured program with stricter rules. 20%+ opens B lenders. 25–35%+ opens privates. Topping up the down payment by even a few points often unlocks a materially cheaper lender.
Credit profile A clean bureau above 720 opens almost every door. Sub-680 pushes most files into B or private territory, which adds rate and fees. One-off late payments are usually fixable; patterns rarely are.
The property itself B lenders in particular have postal-code appetites — some will not lend on condos in specific Toronto buildings, some cap rural properties in Durham, some prefer owner-occupied over rentals. The property can change the lender list before the income does.

This is where a broker earns their fee: not by rate-shopping, but by testing the file against A, B and private programs before any hard credit check hits your bureau — and by knowing which insurer or lender actually wants a file like yours. Razi Khan, Founder and Mortgage Broker at Pegasus, has placed self-employed GTA files across every one of these channels since 2008.

If your bank has already turned you down because you only have one year of self-employed income, that is usually a lender-fit problem, not a dead end. A 15-minute call with a Toronto broker can show you which lenders — including insured self-employed programs — would look at your file differently.

Book a 15-minute call See what you could afford

Common Mistakes One-Year Self-Employed Buyers Make in Ontario

  • Applying to multiple banks on their own, triggering several hard credit checks before realising the file is not an A-lender fit.
  • Topping up declared income on this year's tax return without talking to the broker (and ideally an accountant) first — the move can either help or hurt depending on timing.
  • Treating "self-employed" as one category — the documentation stack differs materially between sole proprietor and incorporated.
  • Underestimating cash needed to close by forgetting Ontario Land Transfer Tax plus Toronto's municipal LTT on homes inside the city.
  • Assuming insured mortgages are closed to self-employed applicants and skipping Sagen and CMHC entirely.
  • Taking a private mortgage without a written exit plan to an A or B lender at the end of the term.
  • Waiting a full extra tax year "just to be safe" when a broker could have placed the file today.

If the tax-return question is where you're stuck, that one has a real accounting side. Our affiliated firm, ClearWealth Accounting Advisors, works with Pegasus clients on exactly this trade-off — how much to declare now so the mortgage math works without creating a bigger tax problem next April. For the broader self-employed context, our full guide for self-employed borrowers in Ontario covers the 2026 landscape in depth.

Self-Employed Mortgage FAQ: Ontario and the GTA

Can I get a mortgage in Toronto with only one year of self-employed income?

Yes. Toronto and GTA buyers with one year of self-employment can qualify through an insured self-employed program (Sagen or CMHC) with as little as 5% down and strong credit, or through an alternative (B) lender with 20% down. A major bank's standard channel typically still wants two years of NOAs.

My business is incorporated — do lenders look at my corporate income or my personal T4s?

Both, usually. A-lenders typically qualify on your personal T4 and dividend income from the corporation. Some lenders will also add back a portion of retained earnings or corporate net income if your accountant can document it. The exact treatment varies lender by lender.

I declare less income than I actually earn to save on taxes — does that disqualify me?

Not necessarily. A-lenders only see declared income, but stated-income programs at some insured and most B lenders can use gross-up or stated figures supported by bank statements, invoices, or a CPA letter. The same gross receipts can produce very different mortgage limits depending on which program reviews them.

How much do I need to put down as a 1-year self-employed buyer in the GTA?

5% can work if the file fits an insured self-employed program and the home is under $500,000. 10% applies to the portion between $500,000 and $1.5 million on insured files. For B lenders, plan on 20% minimum. For private, 25% or more is typical.

Is a B lender a bad option, or just a different one?

Just a different one. B lenders are regulated and transparent; they fill the gap when a borrower's income or credit does not fit the big bank model. They cost more than an A lender but far less than a private, and most B-lender self-employed clients move to an A lender at renewal.

Can I use a private mortgage for one year and then switch to a bank?

Yes, and that is the most common private strategy for one-year self-employed buyers. The private holds the position for 12–24 months while you file your second NOA, and your broker arranges a refinance to an A or B lender at renewal.

Will my credit score drop if I apply to several self-employed lenders?

Only if a lender runs a hard credit check. A broker typically runs one hard pull and then shops that same bureau to multiple lenders, which protects your score. Several banks running their own hard pulls can hurt it noticeably.

I'm a sole proprietor in Mississauga — what documents will I need?

Expect to provide your most recent T1 General and Notice of Assessment, 6–12 months of business bank statements, 2 months of personal bank statements, confirmation of down payment source, and government ID. If HST-registered, your HST filings may also be requested.

Does the Sagen or CMHC self-employed program really accept one year of income?

Yes, both insurers publish self-employed programs that can accept one year of self-employment when the applicant has strong credit, verifiable prior industry experience, and a reasonable down payment. The specific documentation differs between the two insurers.

How long does a self-employed mortgage approval take in Ontario?

With documents ready, pre-approval often takes 24–72 hours. Full approval after an accepted offer typically takes 5–10 business days for A and B lenders, and can be faster for private. Complex files take longer; the broker will tell you upfront.

Self-Employed in the GTA With One Year of Income? Let's See What Works for Your File.

You do not need to wait another tax year to buy. Most one-year self-employed buyers we work with across Toronto, Mississauga and Brampton qualify with the right lender match. On a free 15-minute call, we'll review your business structure, down payment and credit, and show you exactly which lenders would say yes today.

Book your free 15-minute broker call

Or call 416-281-9628

This article is for informational purposes only and does not constitute financial advice. Speak with a licensed mortgage professional before making any mortgage decisions. Pegasus Mortgage Lending Center Inc. · FSRA Lic # 11479. Broker compensation is typically paid by the lender on most residential A-lender files; alternative and private files may carry a lender or broker fee, which will be disclosed to you in writing before you commit.
Razi Khan — Founder, CEO and Mortgage Broker at Pegasus Mortgage Lending

About the author

Razi Khan

Founder, CEO & Licensed Mortgage Broker · Pegasus Mortgage Lending · Toronto, Ontario · FSRA Lic # 11479

Razi Khan is the Founder, CEO, and a licensed Mortgage Broker at Pegasus Mortgage Lending Center Inc., based in Toronto. With over 20 years of experience in the Canadian mortgage industry, Razi has personally guided more than 3,000 clients through some of the most complex and high-stakes financial decisions of their lives — from first-time purchases in the GTA to refinancing strategies, alternative lending solutions, and cross-border mortgages for Canadians buying in the United States.

Razi founded Pegasus in October 2008, launching the brokerage at the height of a global financial crisis. He works across the full spectrum of borrower profiles, with particular expertise in complex files including self-employed borrowers, credit-challenged clients, and investors building multi-property portfolios.

Sources & References

  • Office of the Superintendent of Financial Institutions (OSFI), Guideline B-20 — Residential Mortgage Underwriting Practices and Procedures: osfi-bsif.gc.ca
  • Canada Mortgage and Housing Corporation (CMHC), self-employed mortgage loan insurance: cmhc-schl.gc.ca
  • Sagen, Business for Self program: sagen.ca
  • Financial Services Regulatory Authority of Ontario (FSRA): fsrao.ca
  • Government of Ontario, Land Transfer Tax: ontario.ca/document/land-transfer-tax
  • City of Toronto, Municipal Land Transfer Tax: toronto.ca
  • Canada Revenue Agency, Notice of Assessment: canada.ca

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