If you’re a working artist, hustling is a way of life: taking random illustration contracts to cover your bills, playing late shows or doing double-duty as sculptor by day and social media maven by night.

And yet, you’ve probably wondered whether—in spite of all your hard work—you’ll ever be able to take some of the major financial steps many non-artists take as a matter of course. Buying a house or condo, for example. When was the last time you heard about a financial institution that wanted to give a playwright a mortgage?

Qualifying for a mortgage as an artist is not only possible, it’s not nearly as difficult or unusual as you might think. Let’s take a look at five major factors that will influence the qualifying process.

Down payment

“Most people think that, as self-employed artists, they are going to have to make a huge down payment or pay unspeakably high interest rates,” says Isabelle Hebert, a culture banker at ATB’s Branch for Arts & Culture. “That might be true through some lenders, but I can guarantee it is not the case with me at The Branch.”

While the size of your down payment does matter, artists have the same down payment options as any other home buyer.

There are two basic types of mortgage: conventional (or uninsured) mortgages, which have down payments of 20 per cent or more, and insured mortgages, which have down payments between 5 and 20 per cent.

This means that you may only have to come up with five per cent of the purchase price of your future home. (Just remember that insured mortgages require an insurer’s approval as well as a bank’s approval.

Income

A big part of qualifying for a mortgage is being able to demonstrate that you can afford to make mortgage payments, which means being able to prove your income. For an artist, especially a self-employed artist, that may not be as simple as producing a T4 slip or a pay stub.

If you have a day job (or if your spouse has a day job), that salary might be sufficient to qualify you for a mortgage. But if the bulk of your income comes from independent sales or some form of contract work, your average income over the past two years is probably the best metric by which to judge whether or not you can afford a mortgage.

So how do you prove your average income over two years when you’ve been paid in cash, cheques, arts grants, free drinks, e-transfers and contributor’s copies?

The most important documents you’ll want to provide a banker are your last two years’ T1 Generals, your most recent Notice of Assessment (NOA), your most recent T4s (if you have any), any recent letters of employment, and two years of financial statements (if you’re incorporated). If you happen to be earning income on investments, that may also help you qualify; to demonstrate investment income, provide a Statement of Investment Income (T5).

As you’ve probably guessed, you’re going to have to be caught up on filing your income tax. Not only will you need to provide a banker with official documents like T1s, you won’t be able to use unclaimed income to qualify for a mortgage.

Sole proprietorship vs. corporation

Whether you’re registered as a sole proprietorship or a shareholder in a corporation will change how your income is assessed.

If you’re a sole proprietor, the two-year average of net business income on your T1 Generals may not be enough to qualify you for a mortgage. (If you, like most sole proprietors, aim to deduct the largest amount possible from your income, your net income may only be about half of your gross business income.)

If your average net income is insufficient to qualify for a mortgage, a banker may be able to take your net income and “gross up” (or increase it) by 15 per cent. 

If you’re a shareholder in an incorporated business, a banker can look at the available cash flow of the business, and bump up  your personal net income by taking into account interest costs, amortization and taxes. A banker can also count your shareholder payouts over a two year average as usable income.

Considering transitioning from sole proprietor to incorporated company before house shopping? Make sure you make that decision well in advance. Bankers use audited financial statements when assessing you for a mortgage, which means you’ll need to be in business for at least one year before attempting to qualify so that you can supply an audited statement from an accountant.

Keep in mind that incorporating affects every area of your business, from day-to-day operations to the way you file your taxes. “I think ultimately the decision to incorporate needs to be made in conjunction with an accountant, as so much will change above and beyond just the mortgage application,” Hebert says.  

Credit score

Credit scores still play a major role in the mortgage approval process. You’re probably going to need a score of at least 630 to qualify.

The good news is that if your score is lower, a banker can work with you to improve your credit score and your spending habits. It might take a little longer to qualify for a mortgage, but when you do, you’ll be financially healthier—and better equipped to handle the responsibilities of home ownership

What you can afford

“Walk before you run,” Hebert says. “Get a feel for what kind of mortgage payment you feel comfortable with.” 

While a banker can take stock of your finances as they appear on paper, it’s always wise to make a personal assessment of the factors that don’t fit so easily into a spreadsheet: How comfortable are you with limiting your spending to afford mortgage payments? How do you feel about different kinds of debt? How do you expect your income and financial responsibilities to fluctuate over the next few years? Do you have a safety net in place if something unexpected happens that heavily impacts your finances? A banker will be able tell you whether you can qualify for a particular mortgage, but only you can decide whether you should.

For example, co-financing (perhaps with a parent) and borrowed down payments are options that might be available to you, but if your income is not enough to qualify for a mortgage, it might not be wise to put yourself in a position to have to make payments on one.

Whatever your down payment, income, business registration status or credit score, the most important thing to remember is that you, as an artist, have options when it comes to purchasing a home of your own. And we’re here to make your dreams of ownership a reality.

If you'd like to talk to someone about artist financing, visit The Branch for Arts & Culture—online or in person.