Self-Declared Income mortgages for self-employed borrowers in Canada

This article was produced in partnership with Neighbourhood Holdings

It’s an all too familiar — and increasingly common — challenge. You have a client who’s a successful business owner, has excellent credit, a longstanding relationship with their bank, and a solid down payment. Yet their mortgage application was declined.

Why? Most often, it’s because their income didn’t conform to traditional documentation requirements.

Like many entrepreneurs, their income was irregular on paper even though their business performance was strong. In short, they’re penalized for how they earn their money, not how much they earn.

“Despite their solid overall profile, the bank couldn't move forward due to non-standard income documentation, which is common with self-employed or non-traditional earners,” explained Jessica Yang, marketing manager at Neighbourhood Holdings. “Our Self-Declared Income Program was designed to fill that gap.”

In one such scenario, Neighbourhood Holdings stepped in to do just that, approving a first mortgage with monthly interest-only payment option. This gave the client the flexibility to move forward without delay, secure the home they wanted, and see the broker involved as a go-to partner who finds a way to get the job done.

A growing challenge in a changing market — and Neighbourhood’s solution

Canada’s workforce is evolving quickly. Today, over 13% of employed Canadians are self-employed. From business owners, real estate investors and freelancers to contractors and gig economy workers, many earn above-average incomes, have strong credit, and can contribute healthy down payments. Yet they routinely face rejection from traditional lenders due to how they earn — not because of their ability to repay.

Simply put, traditional lending models haven’t kept pace with the way Canadians work and earn. Relying too heavily on standard income documentation — two years of CRA-verified NOAs or T4s, consistent year-over-year earnings, and clear-cut employment history — and not taking important nuances — such as deducting business expenses which makes net income appear low — into account, it’s a dead-end route for this growing cohort of Canadians.

“What does that mean for brokers? A lot of frustration,” Yang said. “You see the strength of the file, but traditional lenders often aren’t set up to support their unique financial situation.”

But thankfully, it’s not the only road forward. Alternative lending has become an essential tool in a broker’s arsenal. Neighbourhood Holding’s Self-Declared Income Program was purpose-built with flexibility and common sense, bridging the chasm between strong borrowers and rigid — dare we say outdated — underwriting frameworks. Instead of demanding T4s and NOAs, the focus is on the bigger picture.

That flexibility doesn’t mean cutting corners — quite the opposite. As long as borrowers’ taxes are up to date, Neighbourhood’s program is built on thoughtful, case-by-case analysis that respects both the borrower’s story and their responsibility as a lender.

Neighbourhood applies a logic-driven, common-sense lens to every approval. They look at whether the declared income makes sense for the borrower’s life stage, experience, and whether they can understand the business model. If someone declares their income source as a landlord, for example, a property list may be requested. If the story aligns, the mortgage fits the borrower’s financial profile, the deal can move forward. It’s not about checking boxes — it’s about seeing the full picture.

A thoughtful lens on business-for-self borrowers

As part of their commitment to responsible lending, Neighbourhood applies more than just flexibility — they apply discernment. When working with business-for-self (BFS) borrowers, brokers can play a key role in ensuring the income narrative is not only clear, but credible. It’s not about rigid checklists; it’s about asking the right questions.

Here are a few helpful questions brokers can ask during their client conversations. While not every borrower will have a perfect answer to each, these questions help uncover the story behind the income and support stronger submissions:

• Business background & experience

• How long have you been in business/industry?

• Can you describe your business and what you do day to day? (Tip: Avoid vague titles like "consultant" or “importer” — be specific, e.g., “IT consultant” or “textile importer from China.”

• Do you have any international ties or operate across borders?

• Income consistency & legitimacy

• Can you walk me through your typical monthly or yearly income?

• Is your business primarily cash-intensive?

• Is your business involved in any sectors that receive greater attention, like crypto, or import/export?

• Documentation & verifiability    

• Is your business registered or verifiable?

• If your income is primarily generated through ownership or management of      assets (like properties or investments), can you provide documentation?

• Do you or your business have an online presence or website that helps explain what you do?

These questions don’t need to complicate the process — in fact, they simplify it by ensuring that everyone involved is confident in the legitimacy and logic of the deal. When brokers ask these questions early, it leads to faster, more informed decisions.

“We take a holistic approach to income verification,” Yang summed up. “Before submitting, always provide a clear income narrative. You know your client — help us see what you see. The more context you provide upfront, the faster we can say ‘yes.’”

Empowering brokers to say yes more often

Ultimately, the Self-Declared Income Program means you don’t have to turn away a client because of red tape. It applies a more human lens to the mortgage process, something increasingly needed in today’s diverse economic environment. And that is Neighbourhood Holding’s driving mission: to help you help Canadians access more homeownership and wealth-building opportunities.

“Stop chasing approvals; you’ve got clients who deserve a shot and we’ve got the tools to make it happen,” Yang said. “Reach out about our Self-Declared Income Program — or any of our other solutions — today. We want your clients into the homes and investments they deserve.”