Self-employed, a business owner, or have non-traditional income that's hard to document? Stated income mortgages offer a path to homeownership when traditional verification falls short, allowing you to qualify based on declared income rather than tax returns.
What Is a Stated Income Mortgage?
A stated income mortgage allows you to declare your income rather than prove it through traditional documents like T4s or tax returns.
Important clarification:
"Stated income" doesn't mean you make up numbers. You state what you earn, and lenders use alternative methods to verify it's reasonable.
Who Uses Stated Income Programs?
Self-employed individuals:
Business owners who minimize taxable income through deductions.
Commission-based workers:
Real estate agents, salespeople with variable income.
Recent self-employment:
Less than 2 years of tax returns available.
Cash-heavy businesses:
Industries where income is harder to document.
See our detailed self-employed mortgage guide for more options.
How Lenders Verify Stated Income
Lenders use alternative verification:
Business bank statements:
12-24 months of deposits showing revenue patterns.
Business financial statements:
Prepared by an accountant.
GST/HST returns:
Sales volume indicates business activity.
Contracts and invoices:
Proof of ongoing work.
Industry benchmarks:
Is your stated income reasonable for your profession?
Down Payment Requirements
Stated income mortgages require larger down payments:
- Minimum: 20% (uninsured mortgage)
- Typical: 25-35%
- Some lenders: 35%+ for higher risk files
Why? Larger equity reduces lender risk when income verification is limited.
Interest Rates
Expect rates 0.5% to 2.0% higher than conventional mortgages:
- A-lender stated income: +0.25% to 0.75%
- B-lender stated income: +0.75% to 1.5%
- Private stated income: +2.0% or more
The rate reflects the perceived higher risk.
Stated Income vs Traditional: Comparison
| Factor | Traditional | Stated Income |
|---|---|---|
| Income proof | T4s, NOAs, tax returns | Bank statements, declaration |
| Down payment | 5-20% | 20-35% |
| Interest rate | Lowest available | Premium |
| Approval speed | Standard | Often faster |
| Best for | Employees | Self-employed |
Common Stated Income Mistakes
Over-stating income:
Claiming income you can't reasonably demonstrate through bank deposits invites scrutiny.
Under-documenting:
Even stated income programs need supporting documents.
Ignoring alternatives:
Sometimes you can qualify with traditional programs using different documentation.
Not shopping around:
Lenders vary significantly in stated income programs.
Building Toward Traditional Qualification
Stated income should be a bridge, not a permanent solution:
Year 1: Use stated income program
Year 2-3: Build tax returns showing higher income
Renewal: Qualify for traditional mortgage with better rate
Alternative Options
Before going stated income, explore:
1. Non-QM programs:
Some lenders have specialized self-employed products.
2. Bank statement programs:
12-24 months of deposits, calculated differently.
3. Asset-based lending:
Qualify based on investments rather than income.
4. Add-back programs:
Lenders add back business deductions to taxable income.
What's Next
Stated income mortgages serve an important purpose but come at a cost. Work with a broker who understands alternative lender options to find the best solution for your situation.
Ready to Get Started?
Contact us today for personalized mortgage advice and competitive rates.
Frequently Asked Questions
"Stated income" doesn't mean you make up numbers. You state what you earn, and lenders use alternative methods to verify it's reasonable.
