If you`re a contract employee in Canada and you`re interested in buying a home, you might be wondering whether you can get a mortgage. The good news is that, yes, you can. However, the process might be a bit more complicated than it is for someone with a traditional job.
Here`s what you need to know about getting a mortgage in Canada as a contract employee:
1. You`ll need to prove your income.
One of the biggest hurdles you`ll face as a contract employee is proving your income. Unlike someone with a traditional job who can simply show their pay stubs, you`ll need to provide additional documentation that shows your income is consistent and reliable.
This might mean providing invoices, contracts, and bank statements that show your income over a period of several months or even years. You might also need to provide a letter from your accountant or a statement from your business that shows your current income and projected earnings.
2. You`ll need a higher credit score.
Because lenders see contract employees as a higher risk than someone with a traditional job, you`ll need to have a higher credit score to qualify for a mortgage. A score of 650 or higher is generally considered good, while a score of 700 or higher is preferred.
To improve your credit score, make sure you pay all of your bills on time, keep your credit card balances low, and avoid opening new lines of credit in the months leading up to your mortgage application.
3. You might need a higher down payment.
In addition to a higher credit score, you might also need a higher down payment to qualify for a mortgage as a contract employee. This is because lenders see contract employees as a higher risk and want to be sure that you have enough money invested in the property to make it worth their while.
In general, you`ll need a down payment of at least 20% of the home`s value to qualify for a mortgage as a contract employee. However, some lenders may require an even higher down payment depending on your income and other factors.
4. You might need to work with a mortgage broker.
Finally, it`s important to note that getting a mortgage as a contract employee can be complicated. If you`re not familiar with the process or the documents you need to provide, you might want to work with a mortgage broker who can help you navigate the process and find a lender who will work with you.
Overall, getting a mortgage as a contract employee in Canada is possible, but it requires more preparation and documentation than it does for someone with a traditional job. By proving your income, improving your credit score, and working with a mortgage broker, you can increase your chances of qualifying for a mortgage and achieving your dream of homeownership.