Getting a mortgage on commission, gig or bonus income

The real problem is averaging, not eligibility

Variable income is not a disqualifier. Plenty of people buy homes in Toronto on commission, bonus, tips, rideshare earnings or contract work. What catches people out is how much of that income a lender agrees to use.

The general principle is that lenders want to see a track record, because this year's good year is not evidence on its own. In practice that usually means two years of history, averaged — so a strong recent year gets pulled down by a weaker prior one. If your income is climbing, averaging works against you, and that single mechanic is the reason most variable-income borrowers qualify for less than they expect.

Beyond that shared principle, treatment diverges sharply between lenders. Some will average and use the full figure. Some apply a discount to the variable portion. Some will count a bonus only if it is contractual rather than discretionary. Some want the income in the same line of work; others care only about the deposits.

That is the whole argument for not walking into a single branch and accepting their answer as the market's answer.

Why your tax return is the whole conversation

For anything self-employed — and rideshare, delivery and most contract work is self-employed — your mortgage is built on your filed tax returns, not on your gross receipts or your bank balance.

That creates a tension nobody warns people about. Good accounting minimises your taxable income. Mortgage qualification maximises it. The write-offs that made last April comfortable are the same write-offs that shrink what you can borrow this year, and you cannot have both.

There is no trick here and I will not pretend otherwise. What there is, is planning: if a purchase is two years out, that is the window in which the decision about how aggressively to write off actually matters. Deciding it the month before you apply is too late.

Some lenders work differently — using business bank statement deposits, or adding back certain deductions, rather than reading the bottom line of your return. Those programs genuinely exist and they are frequently the right answer for a self-employed buyer. They are also not what a branch will lead with. More on this on the self-employed mortgages page.

One thing that is not negotiable: your returns need to be filed and your taxes paid. Outstanding CRA balances are a hard obstacle, because CRA can register against your property. If that is your situation it is solvable, and it is the first thing to deal with rather than the last.

If the answer at the bank was no

It is worth understanding what a decline usually means, because people take it as a verdict on themselves and it rarely is.

A bank operates one set of rules. If your income shape does not fit those rules — not enough history, the wrong kind of bonus, net income too low after write-offs — their system says no, and the person delivering that answer has no ability to look elsewhere. Which is not a criticism of them. It is a structural limit of working at one lender, and I say that having spent years doing exactly that at CIBC and Scotiabank.

The broker channel reaches lenders with different rules: some specialise in self-employed files, some in newer income histories, some price for credit history instead of declining on it. The rate on those is usually higher than a bank's best, and that is a real cost that belongs in the conversation honestly. Frequently the right plan is a two-to-three year term with an alternative lender while the history seasons, then a move back to an A-lender at renewal — which, since the straight-switch rules changed, is considerably easier than it used to be.

What I would not do is apply repeatedly to several banks hoping for a different answer. Each application leaves an inquiry, and a file that has been shopped badly is harder to place than one that has not been touched.