Business For Self

Business For Self, usually shortened to BFS. A category of mortgage program designed for self-employed borrowers where the lender accepts a stated income figure backed by 6 to 12 months of business bank statements, rather than the full T1-based verification a salaried borrower goes through.

The point of BFS: self-employed clients often have legitimate tax-minimizing deductions that lower T1 net income, making it look like they earn less than they actually do. A bank reading line 15000 on the T1 sees the smaller number and underwrites accordingly. A BFS program lets the file qualify against actual business cash flow instead. Trade-off is usually a small rate premium (0.10 to 0.50%) or an insurance premium of 0.5 to 1.5%, depending on the program. CMHC, Sagen, and Canada Guaranty all run BFS insurance programs.

For the right file, the rate or insurance premium pays for itself in mortgage access. The full walk-through is at Self-Employed Mortgages in Canada: The Bank's Blind Spot. Related: Alt-A for files that need more flexibility than BFS provides.