Maria is a self-employed graphic designer in Montreal. She wishes to purchase a multi-unit residential property. Her business income fluctuates, and her net income on her T1 General for the last two years was $65,000 and $72,000 respectively, after significant deductions. For mortgage underwriting purposes, how will a lender typically assess her income for qualification?

Question: Maria is a self-employed graphic designer in Montreal. She wishes to purchase a multi-unit residential property. Her business income fluctuates, and her net income on her T1 General for the last two years was $65,000 and $72,000 respectively, after significant deductions. For mortgage underwriting purposes, how will a lender typically assess her income for qualification?

Answer options:

• Average her gross revenue from the last two years.
• Use the higher of the two years' net income from her T1 General. ✅ Average her net income from the last two years' T1 Generals, potentially allowing add-backs for certain expenses.
• Demand three years of T1 Generals and use the lowest net income.

Correct answer: Average her net income from the last two years' T1 Generals, potentially allowing add-backs for certain expenses.

Explanation: For self-employed individuals (BFS), lenders typically average the net income from the last two years' T1 Generals and Notices of Assessment (NOA), and may allow for certain business expense add-backs if consistently present and deemed non-deductible for income for Qualification purposes, to get a more accurate picture of stable income.