Self Employed Income Add-Back Program
Income Add-Backs are a tool some lenders use to increase the amount of self-employed income we can use on your mortgage application. When used properly, income Add-Backs can increase the amount you qualify for for your next mortgage.
- Creates higher qualifying income
- Incorporated or Sole proprietor
- Accepted by many lenders
What Is An Income Add-Back Program?
Many self-employed Canadians run into the same issue: your business may have strong cash flow, but your tax return shows a lower income because you’ve claimed normal business expenses to reduce taxable income.
With an income add-back program, we review your business financials or personal tax returns and identify specific, allowable business expenses that some lenders will treat as non-cash or one-time items - lenders will then “add back” all or a portion of these expenses to your mortgage application - increasing your usable income & allowing you to qualify for a larger mortgage amount.
Why Use An Income Add-back Program?
An income add-back program can help self-employed borrowers bridge the gap between strong business cash flow and the lower “net income” shown on their tax returns after claiming legitimate business write-offs.
Many lenders will qualify you using the lower net number after expenses, which can make it harder to get approved or qualify for the mortgage amount you are looking for.
With an add-back program, we review your financials & tax returns upfront and identify specific expenses that certain lenders may allow to be added back to your mortgage application for qualifying.
When an income add-back program is used properly, the result is often a higher qualifying income - allowing you to qualify for a larger mortgage amount, without changing how you run your business or file your taxes.
Do you have questions?
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Who Can Use An Income Add-Back Program?
An income add-back program is designed for self-employed borrowers whose true earning power isn’t fully reflected in their personal tax returns.
It can be a good fit for sole proprietors, contractors, and incorporated business owners who have consistent income and healthy cash flow, but show a lower net income after legitimate business expenses are deducted.
In many cases, borrowers with strong year-over-year performance, stable work in the same industry, and a meaningful amount of eligible expenses are good candidates for an add-back program, because it can help a lender recognize more of their usable income for mortgage qualification.
Documents Required
To apply for an income add-back program, lenders usually require:
- Two years of personal T1 Generals
- Two years of Notices of Assessment
- Business financial statements (if incorporated)
- T2125 statements for sole proprietors
- Accountant-prepared statements (preferred)
Clean, consistent documentation improves our odds for a mortgage approval.
💡 Did you know?
Did you know some lenders will add back amortization and depreciation from the corporate financials to personal income. This is a great option for clients who have equipment or vehicles in their business.
Why Working With a Self-Employed Mortgage Specialist Matters
- Access to Lenders Who Use Income Add-Back programs
- Focused on self-employed mortgages
- Knowledgeable in self-employed mortgage programs
- Faster, Smoother Mortgage Approvals
Case Study: Using Add-Backs to Turn a Decline Into an Approval
Client Details:
The self-employed client’s business had steady revenue and healthy cash flow, but his personal taxable income looked low because he legitimately claimed common write-offs such as vehicle costs, Capital cost allowance and home office expenses. On paper, his net income didn’t reflect what he was actually able to afford month-to-month.
❌ Problem:
After receiving an accepted offer on a home purchase, the client submitted his mortgage application to his bank for approval.
The bank reviewed his mortgage application and documents and qualified him using a strict, standard approach based primarily on net taxable income shown on his personal tax returns.
Because his business deductions reduced his net usable income to qualify, the bank ultimately declined the mortgage application.
Even though the client had consistent work, strong deposits, and predictable income, the bank’s qualifying method didn’t account for the reality that many business expenses are necessary for tax purposes but don’t always represent a true drop in borrowing ability.
The decline left the client frustrated and unsure of what to do next.
✅ Solution:
The client came to us for a second opinion.
We reviewed his tax returns and financials to identify eligible expenses that some lenders may allow us to add back for mortgage qualification.
The Result: Approved and Back on Track
Once the approved add-backs were applied to the mortgage application, the new lender could recognize more of the client’s usable income.
doing this strengthened the application and led to a mortgage approval—keeping the new home purchase on track.
💡 Did you know?
Did you know an income add-back program can often be the difference between a mortgage approval and a decline?
Other Self-Employed Mortgage Programs
Frequently Asked Questions
Do Add-Backs increase my taxes?
No. Add-Backs are used only for mortgage qualification and do not affect how you file or pay taxes.
What kinds of expenses can be added back?
Common income add-backs may include items like motor vehicle expenses, capital cost allowance (CCA), and office or home office expenses. Other expenses may also be eligible, depending on the lender’s guidelines and the supporting documentation.
What is an income add-back, in simple terms?
It’s a method some lenders allow where certain business expenses are added back to your income to better reflect what you can actually afford.
How much can add-backs increase my qualifying income?
It varies widely. The increase depends on your financials & tax returns, the lender’s guidelines, and which expenses are considered eligible.
Will using an income add-back program affect my interest rate?
In many cases, using an income add-back program does not come with a higher interest rate.
Get Self-Employed Mortgage Advice Today
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