Can I get a mortgage if I'm self-employed and pay myself in dividends?
Updated · Published
Yes. Dividends count as income. But lenders look at your personal tax return, not what your company earns. If you pay yourself a small dividend to save tax, you'll qualify for less. Start planning a couple of years before you want to buy, if you can.
I'm Jesse, a mortgage agent in Toronto. I work with a lot of incorporated business owners. I get this question a lot.
Jesse.In this article
How do lenders look at self-employed income?
Lenders look at your personal tax returns from the last two years, not your company's books. Five rules decide your number.
- 1You need two years.Most lenders want two years in business and two years of personal tax returns.
- 2Lenders use line 15000 on your tax return.That's your total income. It shows up on your T1 General and your Notice of Assessment (NOA).
- 3Lenders average your last two years.If your income changed a lot between those years, each lender has its own rule. More on that below.
- 4Your taxes must be paid.Your NOA should show nothing owing to CRA.
- 5Money left in your company doesn't count at most banks.Only what you pay yourself counts.
Plan on 20% down. Self-employment with less than 20% down is a real challenge. Your options shrink a lot.
Heads up: your tax return shows more than you got
When you pay yourself a dividend, CRA adds 15% to it on your tax return. That's the gross-up on non-eligible dividends, the kind most small business owners get (CRA).
$75,000× 1.15 =$86,250
$75,000 in dividends shows up as $86,250 on line 15000.
Some lenders use that higher number. Others use the $75,000 you actually got. Plan on the lower number. If your lender uses the higher one, that's a bonus.
What happens if your income went up or down?
Every lender treats a change in income differently. There's no single rule. Here's how three major lenders handle it, based on their lender guidelines as of October 2026.
Say you made $100,000 last year and $80,000 this year. That's a 20% drop. Your two-year average is ($100,000 + $80,000) ÷ 2 = $90,000.
| Lender | Their rule | Uses |
|---|---|---|
| One major bank | Two-year average only if income stayed flat or went up. If it dropped at all, they use your most recent year. A drop of more than 20% gets a closer look. | $80,000 |
| A large lender | Uses your most recent year if your income dropped at all. | $80,000 |
| Another major bank | Two-year average unless either year is more than 20% above or below it. Then the lower year, unless their credit team signs off.$80,000 is 11.1% below $90,000 ($10,000 ÷ $90,000). Under 20%. | $90,000 |
$80,000 gets you a mortgage of about $270,000. $90,000 gets you about $318,000. Same tax returns, about $48,000 difference, just from the lender.
Based on a 4.74% 5-year fixed rate, 25-year amortization, 20% down and $750 a month in property tax and heat.
This is the core of what I do. It's not just finding a lender that says yes. It's a balance. We find the lender where you qualify, with a strong rate and a mortgage that fits you.
What are add-backs?
An add-back is when a lender adds some of your business write-offs back to your income. A gross-up is when a lender adds a flat 15% instead.
Why it matters: write-offs like your home office and car lower your tax. They also lower the income a lender sees.
Example: a $70,000 tax return with $23,000 in write-offs. $70,000 × 1.15 = $80,500.
The catch if you're incorporated: most lenders only offer this to people who aren't incorporated. One major bank will gross up your salary and dividends if you have 20% down and steady income. Some B lenders will count money you kept in the company.
How much can you borrow? A real example, with the math
It depends mostly on how much you pay yourself. In this example, the same business qualifies for anywhere from about $247,000 to $460,000.
An incorporated consultant in Toronto. The company makes $160,000 a year in profit. They have 20% down and no other debts.
- 5-year fixed 4.74%
- Property tax + heat $750/month
- 25-year amortization
The stress test: You have to qualify at your rate plus 2%. Here, that's 6.74%. How the stress test works
4.74% is one of the best 5-year fixed rates I'm seeing this month for 20% down. The math uses the dividends actually paid, the safer number.
| Option | Income used | Monthly mortgage budget | Max mortgage |
|---|---|---|---|
| A: $75,000 dividends both years | $75,000 | $6,250 × 39% = $2,437.50, minus $750 = $1,687.50 | $247,000 |
| B: $120,000 dividends both years | $120,000 | $10,000 × 39% = $3,900, minus $750 = $3,150 | $460,000 |
| C: $75,000, then $120,000 | Average: ($75,000 + $120,000) ÷ 2 = $97,500 | Most lenders use the averageAt the bank with the 20% rule: $120,000 is 23% above the average ($22,500 ÷ $97,500), so they use the lower year. Max mortgage about $247,000. | $353,000 |
Want your own number? Try the required income calculator or the affordability calculator.
Same business. Same profit. Option B gets $213,000 more than Option A. Option C shows why one big year isn't enough. You need two steady years.
What if your income on paper is too low?
You have three real options.
1. Pay yourself more for two years
You pay more personal tax. You qualify for more. I'll show you how much more home it buys, so you can weigh it against the tax.
2. Use an alternative lender
These are often called B lenders. They look at your business differently than the big banks do.
- Some use 6 or 12 months of business bank statements instead of your tax returns
- Some add back money you kept in the company
- You'll need proof you own the business and a CRA statement showing no tax owing
- 20% down payment or more
- More flexible on credit
- Rates I'm seeing this month start around 4.9% to 5.5% on 1 to 3 year terms, often plus a 1% lender fee
Most people use a B lender for one or two years. Then they move to a bank once their tax returns catch up.
3. Find a lender with a higher debt limit
Most lenders cap your total debt payments at 44% of your income. Some go up to 55%. That can close a small gap without changing your income.
What hurts a self-employed mortgage application?
- Tax owing to CRA. Pay it before you apply.
- Business debts on your credit report. If a car lease, equipment loan or business credit card shows up on your personal credit report, lenders count it against you. Even if the company pays it.
- Income that dropped. Many lenders will use your lower year. Rules vary, so the lender you pick matters.
What documents do you need if you're incorporated?
If you pay yourself in dividends, here's the list. Tick them off as you go.
When should you start preparing?
Ideally, about two years before you buy. Lenders look at your last two tax returns, so that gives you breathing room to adjust how you pay yourself and let it show up on paper.
But life moves fast. Maybe you found the place, or the timing just feels right. Wherever you're at, reach out. I'll look at your numbers and tell you honestly if now makes sense.
FAQ
Do lenders count dividends as income?
Yes. Lenders look at the dividends on your personal tax return. Some use line 15000, which includes the extra 15% CRA adds. Others use the dividends you actually received. Plan on the lower number.
What is line 15000?
Line 15000 is the total income line on your personal tax return. It also shows up on your Notice of Assessment. It's the main number lenders look at when you're self-employed.
Does money left in my company count?
Not at most banks. Some alternative lenders will count it. Expect a higher rate and more paperwork.
Is salary better than dividends for a mortgage?
Both count. Some lenders see salary as more stable, and it needs fewer documents. Your total personal income is what matters.
What's an add-back?
It's when a lender adds some of your business write-offs back to your income. It helps your tax return reflect what you really earned.
What is a B lender?
A B lender is an alternative lender that looks at your business differently than the big banks. Some use bank statements instead of tax returns. Rates and fees are usually higher, and most people use one for a year or two.
How many years of income do I need?
Two years in business and two years of tax returns.
Can I buy with less than 20% down if I'm self-employed?
It's hard. Plan on 20%. With less, your options shrink a lot.
What if my income dropped last year?
Some lenders use your most recent year if income dropped at all. Others still use your two-year average if the drop is small. I'll match you to the lender whose rule fits your numbers.
What if I've been self-employed less than two years?
Most lenders want two years. Reach out before you apply so you know where you stand.
The bottom line
Dividends don't stop you from getting a mortgage. What you pay yourself is what counts. Plan it two years out.
If you're incorporated and thinking about buying, let's talk. I'll show you what a lender will see, and how to get to the number you need. There's no cost to you.
If you're thinking about buying or just have a question about anything mortgage related, reach out.
