Stated-Income Mortgage Program: Pros and Cons for Barrie Homebuyers and Business Owners
August 18, 2025 | Posted by: Kenlock Mortgage Group
Did You Know?
Many self-employed Canadians are turned down for mortgages by traditional banks, even if they make good money. Why? Because their tax filings often show less income on paper than they actually earn. In Barrie and across Ontario, this has left many business owners and independent contractors looking for alternatives. One option that has grown in popularity is the Stated-Income Program, where borrowers declare their income rather than proving it solely through T4 slips and Notices of Assessment.
These programs can open doors, but they also come with trade-offs. Let’s explore both the opportunities and the challenges so you can make a confident decision about whether this approach is right for you.
What Is a Stated-Income Mortgage?
A stated-income mortgage allows self-employed individuals, small business owners, or commissioned workers to qualify for financing without the traditional paperwork used in salaried employment. Instead of providing years of tax returns, applicants state their income and support it with bank statements, contracts, or accountant letters.
In Ontario, these programs are most often offered through alternative lenders, credit unions, or private mortgage providers rather than the big banks. They fill a gap for people who are financially responsible but don’t fit into the rigid guidelines of conventional lending.
The Pros of a Stated-Income Mortgage
- Flexibility for Self-Employed Borrowers: Business owners in Barrie often reinvest profits or use legitimate tax deductions to reduce taxable income. A stated-income program recognizes this reality.
- Access to Homeownership: Instead of being blocked by bank rules, many clients use this option to buy their first home, upgrade to a bigger property, or refinance.
- Speed of Approval: Alternative lenders can often move faster, since they aren’t tied to the same corporate bureaucracy as major banks.
- Opportunity to Build Credit: Successfully managing a stated-income mortgage can improve your financial profile, making it easier to switch to a traditional mortgage in the future.
The Cons of a Stated-Income Mortgage
- Higher Interest Rates: Lenders take on more perceived risk, so rates are usually above the best bank rates.
- Larger Down Payments: Many programs require at least 20 to 35 percent down. For some buyers, this is a significant hurdle.
- Additional Fees: Alternative or private lenders may charge lender fees, broker fees, or higher appraisal costs.
- Not Available Everywhere: Not every lender in Barrie or Ontario offers this option, so your choices may be limited.
Local Stats That Tell the Story
- According to Statistics Canada, over 2.9 million Canadians are self-employed as of 2024. That is roughly 15% of the workforce, and the number is higher in fast-growing regions like Simcoe County.
- In Ontario, the self-employment rate has climbed steadily, with a significant concentration in construction, real estate, health services, and professional consulting — all industries common in Barrie.
- CMHC data shows that many alternative and private mortgages account for 10%+ of new originations in Ontario, highlighting that thousands of borrowers rely on these programs.
A Realistic Case Study: Meet Alex, a Barrie Business Owner
Alex runs a landscaping business in Barrie. His tax filings show only $45,000 in annual income after deductions, but his actual earnings are closer to $90,000. When Alex applied to a bank for a mortgage, he was declined.
Working with a mortgage broker, Alex explored a stated-income program. By providing business bank statements and an accountant letter, he qualified for a $550,000 mortgage with 25% down. While his rate was slightly higher, he was able to purchase a family home near Kempenfelt Bay.
This case shows how stated-income mortgages can help real Barrie residents achieve homeownership, even if traditional banks say no.
Who Should Consider This Option?
- Self-employed professionals: Realtors, contractors, consultants, healthcare practitioners.
- Small business owners: Retail, restaurant, and service-based businesses.
- Gig economy workers: Ride-share drivers, delivery workers, freelancers.
- Commission-based earners: Sales agents and brokers.
Building Trust: How a Mortgage Broker Helps
Applying directly to lenders can be overwhelming, especially when requirements vary. Our role as mortgage brokers is to:
- Assess your full financial picture, not just your taxable income.
- Compare multiple lenders in Barrie and across Ontario.
- Explain the true cost of the loan, including rates and fees.
- Strategize for the future, with the goal of eventually moving you into a lower-cost traditional mortgage.
Working with a professional ensures you aren’t simply choosing the first lender who says yes, you’re choosing the right mortgage for your long-term goals.
Top 10 FAQs About Stated-Income Mortgages in Barrie
1. Can I qualify for a stated-income mortgage with bad credit?
Yes, but the terms will be less favourable. A larger down payment and higher rates are likely.
2. How much down payment is usually required?
Most lenders ask for 20 to 35 percent, depending on your credit and the property type.
3. Do I still need to show any documents?
Yes. Bank statements, GST/HST returns, contracts, or accountant letters are often required.
4. Are these mortgages only for purchases?
No, you can also use them to refinance, consolidate debt, or invest in additional properties.
5. Will my interest rate ever drop to bank levels?
If you make payments on time and your income stabilizes, you may be able to switch to a traditional lender in the future.
6. Are stated-income mortgages legal in Canada?
Yes. They are offered through regulated alternative lenders and private lenders.
7. Do I have to live in Barrie to apply?
No, but local brokers often have relationships with lenders active in Simcoe County.
8. How quickly can I get approved?
Some applications are completed within a week, much faster than bank approvals.
9. Can I use a stated-income mortgage for an investment property?
Yes, but the down payment and rates are often higher than for primary residences.
10. What happens if the lender thinks I overstated my income?
They may decline your application or require stronger supporting documentation. Always be truthful with your broker.
Final Thoughts
A stated-income mortgage can be a powerful tool for self-employed borrowers in Barrie and across Ontario. It offers flexibility and opportunity, but it also requires careful planning and an understanding of the trade-offs.
If you’re self-employed and feel stuck between what the banks say you qualify for and what you know you can afford, you’re not alone. Many Barrie homeowners have turned to this solution and succeeded with the help of an experienced mortgage broker.
Explore more about mortgages for self-employed business owners here.
We invite you to connect with our team at Kenlock Mortgage Group to discuss your options and see if a stated-income program is the right path for you.