Some of the people banks turn down earn good money. The problem is proving it in the way a bank’s formula expects. If you have solid equity in your home, an equity lender may be able to look at your income differently.
Common hard-to-prove income situations
- Self-employed people whose tax returns show less than they earn, after legitimate write-offs
- Contractors and trades with project-based or seasonal income
- Commission earners with variable pay
- Recent job changes, such as a new role or a move from employee to contractor
- Several small income streams that don’t add up neatly on paper
- Income from investments or rental properties
How equity lenders look at it
Equity lenders still need to see that you can afford the payments, but they may accept:
- Several months of bank statements showing regular deposits
- A reasonableness test: does the stated income make sense for your type of work?
- Notices of assessment alongside business records, even if taxable income is low
- A larger equity cushion to offset the income uncertainty
See equity lending vs traditional mortgages.
What it costs
Flexibility on income usually comes with a higher rate and a lender fee, and the lender may limit how much of your home’s value you can borrow. See what equity mortgages cost.
Building a path back to a bank
Often the best plan is to use an equity lender while you build the documentation a bank wants:
- Talk to your accountant about how your next returns will look to a lender.
- File on time and keep your tax account current.
- Keep business and personal finances separate.
- Check in with a broker before your term ends.
See moving from an equity lender back to a bank.
Be honest on your application
Overstating income on a mortgage application is mortgage fraud. A good broker will help you present your real income clearly, not inflate it.
This article is general information, not financial, legal or tax advice. Lender requirements, rates and fees change and depend on your situation.