Monday, February 9, 2009 Financing Simplified For Self Employed..Self-employed simplified
In recognition of the growing proportion of self-employed people in today’s workforce, CMHC recently added a new initiative called Self-Employed Simplified. CMHC has developed tools that help assess the risk associated with borrowers who have difficulty obtaining third-party validation of their income using traditional forms of documentation. This new offering will help self-employed borrowers and commissioned salespersons to obtain a CMHC-insured mortgage, much like borrowers who receive a salary or hourly wage from an employer.
CMHC Self-Employed Simplified is designed for borrowers who have a minimum of two years in the same type of work and a proven track of responsibly managing their debt. The product will insure mortgages on one- or two-unit homeowner properties and will also be available for refinance transactions, for mortgages up to 90 per cent of a home’s value.
What your buyers need to qualify income
According to CMHC’s Step-by-Step Homebuyers guide, if your buyers are employed by others they’ll need confirmation of salary in the form of a letter from their employer along with other sources of income. They also need to indicate the source and amount of their down payment and deposit along with proof of source of funds for the closing costs (these are usually between 1.5% and 4% of the purchase price). If your buyers are self-employed they must provide their Notice of Assessment, or financial statements either audited or prepared by a practising accountant. The borrower’s income is determined by averaging the income of the previous two year period or using the most recent year if income has increased year over year for four years or more. Other potential sources of income may include rent payments, investment income, tips, spousal support, social assistance or employment insurance.
Source: CMHC February 2009 CommentsNo comments Post Your Comment: |
