The Business for Self (ALT A) product is unique in that the income stated by the borrower cannot be confirmed using traditional methods (previous years Notice of Assessments). As such, the product guidelines require that we assess the stated income for reasonability in relation to all other characteristics on the application such as borrower age, credit profile, LTV, etc. In order to provide a better understanding on how to evaluate these applications, the following are elements to consider in making the assessment: 1) Based on the type and nature of the business, is there an opportunity for the borrower to generate additional income? • What type of business is it? What field? Research the business via the internet. • How long have they had this business? Location? Number of employees? Website? Is there an opportunity for cash? • Is the nature of the company business-to-business (B2B) or business-to-consumer (B2C)? B2C businesses have a greater likelihood for a cash component. If there is a significant difference between net income and stated income, the difference should be associated to cash transactions. If the spread between reported and stated income is large, it should be justified through expenses. These types of applications would typically fall under “provable” income with the 15% gross up, however if the application makes sense, we may still be able to proceed under ALT A. 2) Ensure the rest of the borrower’s profile can support the level of income: • Credit Profile – do trades and limits reflect the typical profile for that income level? • Does the net worth seem reasonable based on the stated income? • Is there a significant increase in shelter payments? • Consider the GDS / TDS ratio? • Does the borrower’s age seem reasonable for the number of years in industry and business type? • Are they first time home buyers? Understanding the “whole picture” is the key to determining the reasonability of stated income and ensuring this program best suit your client’s needs. for your self employment mortgage home financing needs call us at www.darick.ca