Self-Employed Mortgages Explained: The Line 150 Problem

Watch: Self-employed mortgages in 1:55

The short version

• Banks use Line 150 averaged over two years, which is exactly the number good tax planning shrinks.
• Add-backs — capital cost allowance, one-time expenses, business-use-of-home, retained corporate earnings — can rebuild your qualifying income at an A lender.
• B lenders accept bank statements and reasonable stated income for a modest premium; private lenders lend on equity.
• Two years of returns, twelve months of business statements and an accountant's letter do most of the work.

Full video script, scene by scene

Narration, on-screen text and animation direction exactly as produced.

1. Scene 1 · 0:00–0:12

   Cold open: two numbers

   Narration: Your accountant spent years legally reducing your taxable income. Then the bank read only that reduced number. Congratulations — you are too successful at tax planning to get a mortgage.

   On screen: Great tax return. Terrible mortgage application.

   Animation: A tax return slides in. A big number at the top shrinks as write-offs peel away, ending as a small number circled on Line 150. A second, larger number labelled What you actually earn sits beside it.

2. Scene 2 · 0:12–0:32

   What the bank actually reads

   Narration: A chartered bank underwrites your income from Line 150 of your tax returns, confirmed by your Notices of Assessment, usually averaged over two years. Every write-off you claimed — vehicle, home office, equipment, capital cost allowance — comes straight off the income they will use. That is the Line 150 problem, and it is why profitable business owners get declined.

   On screen: A lenders: 2 years of returns, Line 150, averaged

   Animation: A bank underwriter's screen shows a single field: Line 150. Everything else on the return greys out.

3. Scene 3 · 0:32–0:56

   Add-backs: getting your real income counted

   Narration: The first move is not a different lender, it is better arithmetic. Some deductions can be added back: capital cost allowance, one-time expenses, a portion of business-use-of-home, and in many cases the income retained inside your corporation. A broker who builds this properly, with financial statements and a letter from your accountant, can often qualify you at an A lender at the best rate available.

   On screen: Add-backs: CCA, one-time costs, retained earnings

   Animation: Write-offs lift back off the return one by one and drop into a column labelled Add-backs, and the income figure grows.

4. Scene 4 · 0:56–1:22

   The three lender tiers

   Narration: If the arithmetic still does not stretch, you move down the ladder. B lenders — trust companies and credit unions — accept bank statements, business deposits and reasonable stated income, at a modest rate premium plus a lender fee. Private lenders barely look at income at all; they look at equity, and they are priced accordingly. The rule is simple: use the lowest tier that will approve you, and treat anything below A as a two-year plan, not a permanent home.

   On screen: A = cheapest, most paper. B = statements. Private = equity.

   Animation: Three ascending steps labelled A, B and Private, each with a rate dial and a paperwork stack. Paperwork shrinks as the rate rises.

5. Scene 5 · 1:22–1:44

   How to prepare

   Narration: Whichever tier you land in, prepare the same way. Two years of filed returns and Notices of Assessment. Proof the business exists and is active. Twelve months of business bank statements. Financial statements and a short letter from your accountant. And for the six months before you apply, do not open new credit or move large amounts of money without a paper trail.

   On screen: Six months of clean, documented banking beats any letter

   Animation: A checklist ticks itself off: two years of returns and Notices of Assessment, business registration or articles, twelve months of business bank statements, financial statements, accountant's letter, no new debt.

6. Scene 6 · 1:44–1:55

   Close

   Narration: Self-employment is not a credit problem. It is a documentation problem, and documentation problems are solvable.

   On screen: Not a credit problem. A paperwork problem. FSRA #10874

   Animation: The two numbers from the opening merge into one confident figure, stamped Documented. Logo and licensing lock-up.

Questions people ask about self-employed mortgages