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No Income Source but have Large Down Payment - what are my options?

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  • Sep 2nd, 2015 12:50 pm
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Newbie
Aug 30, 2015
4 posts
1 upvote
Kelowna, BC

No Income Source but have Large Down Payment - what are my options?

Hi,

I was self employed but all the money I made I re-invested back into the company. So for the past 3 years I have showed little or no income.
I sold the company recently and have enough funds for a large down payment on a property. I am looking at properties I can live in the basement and rent out the main house on a daily bases. The income of which will be enough to cover the mortgage payments.

I was told however that without a job you can't get a mortgage even if you are willing to put down a large down payment. Is this true? or do I have other options?

I have good credit and I could put down up to 30%.
15 replies
Penalty Box
Oct 17, 2012
2689 posts
120 upvotes
mortgages specialist

outside the 5 0big banks you can get approval ! within no time especially you can put 30% down payment
Deal Addict
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Oct 8, 2014
1015 posts
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Unionville, ON
So if I can put down 30%, I can buy a house even if I have no job/income? That doesn't seem likely...
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Jr. Member
Jan 19, 2004
199 posts
41 upvotes
TripleTAP wrote: mortgages specialist

outside the 5 0big banks you can get approval ! within no time especially you can put 30% down payment
I wouldn't put much confidence into what was said here. Private money can be had for such a case, but you'll be paying 8-10% interest.
Deal Addict
Jul 11, 2010
1164 posts
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Toronto
TripleTAP wrote: mortgages specialist

outside the 5 0big banks you can get approval ! within no time especially you can put 30% down payment
One of the main criteria for a lender to give a mortgage is for the client to have the ability to repay the loan on a regular basis. In order for rent payments to be allowed as income fully executed leases must be in place at the time of the application.
Doug Boswell
intelliMortgage Inc. Brokerage #12326
FSCO #MO09002332
Deal Addict
Jul 23, 2014
1191 posts
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Toronto, ON
Last time I spoke with my Scotia rep when I was applying is if you had 35% down, they didnt have to check my sources of income. We just did the standard 20% down and provided documentation.

I'd contact a mortgage broker for your options.
Deal Addict
Jul 11, 2010
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Toronto
RFD6482 wrote: Last time I spoke with my Scotia rep when I was applying is if you had 35% down, they didnt have to check my sources of income. We just did the standard 20% down and provided documentation.

I'd contact a mortgage broker for your options.
I am curious as to when you talked to the rep. and what the 35% was in reference to. As of Nov 2014 the Office of the Superintendent of Financial Institutions for Canada released new guidelines (B-20). A couple of points are below:

Income Verification

A borrower’s income is a key factor in the assessment of their capacity to repay the mortgage loan, and verification of income helps detect and deter fraud. FRFIs should make reasonable inquiries and take reasonable steps to verify a borrower’s underlying income. This includes substantiation of:
•Employment status; and
•The income history of the borrower.

For borrowers who are self-employed, FRFIs should take reasonable steps to obtain income verification (e.g., Notice of Assessment) and relevant business documentation. In determining the reasonableness of the documentation used to support the income, sound practice suggests that:
•The income amount is verified by an independent source;
•The verification source is difficult to falsify;
•The verification source directly addresses the amount of the declared income; and
•The income verification information/documentation does not contradict other information provided by the borrower in the underwriting process.

Any federally regulated lender has to verify income. Folks applying sometimes wonder why so much paperwork is required: ie: detailed document of the down payment source or for self-employed. It is regulated as to the type of documentation required.
Doug Boswell
intelliMortgage Inc. Brokerage #12326
FSCO #MO09002332
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Aug 2, 2010
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Here 'n There
RFD6482 wrote: Last time I spoke with my Scotia rep when I was applying is if you had 35% down, they didnt have to check my sources of income. We just did the standard 20% down and provided documentation.

I'd contact a mortgage broker for your options.
I'd be shocked if this was actually true once you applied, with the big institutions anyway. I think that's only true with 100% downpayment ;)
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Apr 20, 2011
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Vancouver
RFD6482 wrote: Last time I spoke with my Scotia rep when I was applying is if you had 35% down, they didnt have to check my sources of income. We just did the standard 20% down and provided documentation.

I'd contact a mortgage broker for your options.
That looks accurate and normal for such an amount, Its not unexpected with such high of a down payment
Member
Apr 22, 2015
388 posts
76 upvotes
Toronto, ON
Try a broker, the banks will always need a source of income, you could gamble away any money you have for all they know, so they would want to see some stability. Now when you say you have enough for a for 30% down payment where are the monthly payments and utilities etc coming from for the duration of the mortgage?
Deal Addict
Jul 23, 2014
1191 posts
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Toronto, ON
dougboswell wrote: I am curious as to when you talked to the rep. and what the 35% was in reference to. As of Nov 2014 the Office of the Superintendent of Financial Institutions for Canada released new guidelines (B-20). A couple of points are below:

Income Verification

A borrower’s income is a key factor in the assessment of their capacity to repay the mortgage loan, and verification of income helps detect and deter fraud. FRFIs should make reasonable inquiries and take reasonable steps to verify a borrower’s underlying income. This includes substantiation of:
•Employment status; and
•The income history of the borrower.

For borrowers who are self-employed, FRFIs should take reasonable steps to obtain income verification (e.g., Notice of Assessment) and relevant business documentation. In determining the reasonableness of the documentation used to support the income, sound practice suggests that:
•The income amount is verified by an independent source;
•The verification source is difficult to falsify;
•The verification source directly addresses the amount of the declared income; and
•The income verification information/documentation does not contradict other information provided by the borrower in the underwriting process.

Any federally regulated lender has to verify income. Folks applying sometimes wonder why so much paperwork is required: ie: detailed document of the down payment source or for self-employed. It is regulated as to the type of documentation required.
I spoke with my Scotia rep last year... I believe it was summer 2014 for some reason I clearly remember her saying at 35% there was no documentation needed for income. Maybe they just took your word heh. I'm not sure since we didn't go down that route.
Deal Fanatic
May 1, 2012
9611 posts
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Markham
35% down at BMO or Scotia and you can buy whatever you want without verifiable income sources.

The reasoning is basically that the market is extremely unlikely to tank 35%, so the bank will at worst break even.
Deal Addict
Nov 29, 2005
1290 posts
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Winnipeg
dougboswell wrote: I am curious as to when you talked to the rep. and what the 35% was in reference to. As of Nov 2014 the Office of the Superintendent of Financial Institutions for Canada released new guidelines (B-20).
Those are guidelines that banks are to follow but the wording is in such a way that it is not mandatory. "Shall" vs "Should" in the legal world have different meanings. There is no requirement to check income unless you go the CMHC route in which case they will confirm it anyways so the bank does verify income sources in those situations. Outside of that it is up to the bank if they want to. Non federally regulated lenders can do what they want.
Jr. Member
Nov 5, 2006
124 posts
1 upvote
Is this true? I am helping a relative looking to refinance his mortgage due for renewal this Oct. He's self-employed with low reported income. Now he wants to refinance for a bigger mortgage of around 50% of the appraised value of his Toronto house (around 1 mil). His current outstanding mortgage balance around 200K. Please PM me contact of the bank that can do it.
Anikiri wrote: 35% down at BMO or Scotia and you can buy whatever you want without verifiable income sources.

The reasoning is basically that the market is extremely unlikely to tank 35%, so the bank will at worst break even.
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May 1, 2012
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tomme35 wrote: Is this true? I am helping a relative looking to refinance his mortgage due for renewal this Oct. He's self-employed with low reported income. Now he wants to refinance for a bigger mortgage of around 50% of the appraised value of his Toronto house (around 1 mil). His current outstanding mortgage balance around 200K. Please PM me contact of the bank that can do it.
It's true if your relative is a more recent immigrant. Otherwise it might be difficult. Go into any BMO and ask.
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Feb 2, 2014
8541 posts
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Toronto
30% is not a large down payment. With at least 50% down, you can get the mortgage with no income qualification from major lenders.
dom1234 wrote: Hi,

I was self employed but all the money I made I re-invested back into the company. So for the past 3 years I have showed little or no income.
I sold the company recently and have enough funds for a large down payment on a property. I am looking at properties I can live in the basement and rent out the main house on a daily bases. The income of which will be enough to cover the mortgage payments.

I was told however that without a job you can't get a mortgage even if you are willing to put down a large down payment. Is this true? or do I have other options?

I have good credit and I could put down up to 30%.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative

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