You have been contracting in the oil and gas industry for six years, earning $120,000 to $160,000 annually. You have strong credit, $85,000 saved for a down payment, and consistent work. But when you apply for a mortgage, the bank treats you like a risky borrower because you are not a "permanent employee."
Or you are a freelance graphic designer earning $95,000/year from multiple clients. Your income is stable, your business is growing, but lenders see "self-employed" and immediately ask for two years of tax returns, full business financials, and higher down payments.
This is the reality for contractors and freelancers in Canada. You earn good income, but mortgage qualification is more complex than it is for salaried employees. The good news: it is absolutely possible to get approved. You just need to understand what lenders want, how to document your income, and which lenders are contractor-friendly.
This guide is specifically for Alberta contractors and freelancers navigating the mortgage process.
Understanding Your Employment Classification
From a lender's perspective, how you are classified matters significantly.
W2-Equivalent (T4 Contract Employee)
You work for one company on a long-term contract, receive a T4 (not T4A), and have taxes deducted at source. The company treats you like an employee administratively, even though you are on contract.
Lender treatment: Near-salaried. Many A-lenders will treat you like a permanent employee if:
- You have 2+ years of contract history (same employer or same industry)
- Your contract is renewable or ongoing
- Your employer provides a letter confirming likelihood of renewal
Documentation required:
- Most recent contract
- Letter from employer confirming contract status and likelihood of renewal
- 2 years of T4s
- Recent pay stubs
This is the easiest contractor scenario for mortgage approval.
Independent Contractor (T4A, Self-Employed)
You work for multiple clients, invoice for your services, receive T4As (not T4s), and pay your own taxes. You may be incorporated or operate as a sole proprietor.
Lender treatment: Self-employed. You will need:
- 2 years of tax returns (T1 Generals and Notices of Assessment)
- Business financials (if incorporated)
- Proof of ongoing contracts or client relationships
This is the standard self-employed contractor scenario and requires more documentation.
Freelancer / Gig Economy Worker
You work on short-term projects for multiple clients (Upwork, Fiverr, direct clients). Income is variable, and you may have dozens of small clients rather than a few large ones.
Lender treatment: Self-employed with variable income. Lenders will average your income over 2 years and may discount it by 10% to 25% due to perceived instability.
Documentation required:
- 2 years of tax returns
- Bank statements showing deposits from clients
- List of active clients and contracts
- Platform statements (Upwork earnings, etc.)
Income Documentation: What Lenders Need
The biggest hurdle for contractors and freelancers is proving stable, sustainable income.
A-Lender Requirements (Best Rates)
For approval with a major bank or prime lender:
- Two years of tax returns (T1 General, Notice of Assessment)
- Two years of consistent income (lender averages the two years)
- Proof of ongoing work (current contracts, letter from clients, renewed contracts)
- Credit score 680+
- Down payment 5% to 20% (depending on purchase price)
Income calculation:
- Year 1: $115,000
- Year 2: $128,000
- Average: $121,500
- Qualifying income: $121,500
If your income is trending upward and you have strong contract continuity, A-lenders will approve you at competitive rates (4.5% to 5.2%).
B-Lender Requirements (Alternative Lending)
If you do not meet A-lender criteria (less than 2 years history, variable income, lower credit score):
- 12 to 24 months of bank statements (showing deposit history)
- Stated income or alternative documentation
- Credit score 600+
- Down payment 20% to 35%
Income calculation:
- Lender reviews bank deposits over 12 months
- Average monthly deposits × 12 = qualifying income
- Some lenders apply expense ratio (e.g., 30%) to account for business costs
Rates: 5.8% to 7.2% (higher than A-lenders, but accessible if you do not meet traditional criteria)
Contract Type Matters: How Lenders View Different Arrangements
Long-Term Renewable Contracts (Best Case)
Example: You are a project manager on a 2-year contract with renewable terms. Your employer renews annually.
Lender view: Highly stable. Treated almost like permanent employment.
What strengthens your application:
- Contract renewal history (3+ renewals shows stability)
- Letter from employer stating intention to renew
- Industry demand (high-demand roles like tech, healthcare, engineering are viewed favorably)
Project-Based Contracts (Moderate Case)
Example: You are an electrician working on 6-month to 12-month project contracts. When one project ends, you secure another.
Lender view: Moderately stable if you can show consistent pipeline of work.
What strengthens your application:
- Contracts in hand for the next 6+ months
- History of securing new contracts immediately after previous ones end
- Industry certification or specialization (journeyman ticket, Red Seal, etc.)
Short-Term / Variable Contracts (Challenging Case)
Example: You are a freelance writer with dozens of small clients. Contracts range from one-time projects to ongoing retainers, but nothing is guaranteed.
Lender view: Variable income, higher risk.
What strengthens your application:
- 2+ years of consistent total income (even if individual clients change)
- Diversification (showing you are not reliant on one client)
- Strong credit score (680+)
- Larger down payment (20%+)
Industry-Specific Considerations for Alberta Contractors
Oil & Gas Contractors
Alberta's oil and gas sector employs thousands of contractors — engineers, project managers, welders, heavy equipment operators, safety coordinators.
Lender concerns:
- Industry volatility (oil price fluctuations, boom/bust cycles)
- Contract gaps during downturns
How to strengthen your application:
- Show 3+ years of continuous work through at least one downturn
- Highlight specialized skills (niche certifications make you more employable)
- Demonstrate savings buffer (emergency fund covering 6+ months expenses)
Lender-friendly scenario: You have worked as a pipeline inspector for 8 years, through the 2020 downturn, and currently have a 2-year contract with TC Energy. Lenders view this as stable.
Trades Contractors (Electricians, Plumbers, HVAC, Carpenters)
Skilled trades contractors in Calgary are in high demand. If you are Red Seal certified or have a journeyman ticket, lenders view you favorably.
Lender concerns:
- Seasonal slowdowns (winter can be slow for some trades)
- Income volatility due to project-based work
How to strengthen your application:
- Show year-round income history (demonstrates you work through slow seasons)
- Provide letters from general contractors or clients confirming ongoing relationships
- Highlight certifications (Red Seal, Gas Fitter 1, Master Electrician, etc.)
Tech Contractors / IT Consultants
Calgary's tech sector has grown significantly. Contract software developers, IT consultants, cybersecurity specialists, and data analysts are common.
Lender concerns:
- Perception of income instability (even though tech contract rates are high)
How to strengthen your application:
- Show consistent contract renewals or new contracts immediately after previous ones
- Highlight in-demand skills (cloud architecture, cybersecurity, AI/ML)
- Provide LinkedIn profile or professional portfolio showing strong network and reputation
Healthcare Contractors (Nurses, Allied Health)
Traveling nurses, locum pharmacists, contract physiotherapists, and other healthcare contractors are common in Alberta.
Lender concerns:
- Typically none — healthcare contractor roles are viewed as highly stable due to systemic demand
How to strengthen your application:
- Show active professional registration (CARNA for nurses, ACP for pharmacists, etc.)
- Provide contract history showing continuous placements
- Highlight facility relationships (repeat contracts with Alberta Health Services, Covenant Health, etc.)
Credit Score Requirements for Contractors
Your credit score requirements are the same as salaried employees, but contractors are sometimes held to slightly higher standards due to perceived income risk.
A-Lender Credit Requirements
Minimum: 680 Ideal: 720+
With a 720+ score and 2 years of strong tax returns, you are treated like any other applicant.
B-Lender Credit Requirements
Minimum: 600 Ideal: 650+
Even with lower credit, B-lenders will approve if you have strong income documentation and 20%+ down.
Credit-Building Tips for Contractors
- Maintain 2 active credit accounts (credit card, line of credit, car loan)
- Keep credit utilization below 30% of available limit
- Never miss payments (set up automatic payments)
- Review credit report annually for errors (free via Borrowell or Credit Karma)
Down Payment Expectations
A-Lenders (Prime)
5% to 20% down (same as salaried employees)
If you meet traditional income documentation and credit requirements, your down payment requirements are standard.
B-Lenders (Alternative)
20% to 35% down
Stated income or alternative documentation programs require larger down payments to offset lender risk.
Example:
- Purchase price: $550,000
- Down payment (25%): $137,500
- Mortgage: $412,500
This is the trade-off for more flexible income documentation.
Real Calgary Contractor Examples
Example 1: Oil & Gas Engineer (A-Lender Approval)
Profile:
- Occupation: Mechanical engineer, oil and gas sector
- Income: $145,000 (2023), $152,000 (2024)
- Employment: 2-year contract with Suncor, renewable
- Credit score: 710
- Down payment: $90,000 (15%)
Application:
- Provided 2 years of tax returns
- Employer letter confirming contract renewal likelihood
- Current contract showing 18 months remaining
- Approved by A-lender at 4.9%
Key success factors: Long contract, strong income trend, employer letter, good credit
Example 2: Freelance Web Developer (B-Lender Approval)
Profile:
- Occupation: Freelance web developer, multiple clients
- Income: $88,000 (2023), $102,000 (2024)
- Employment: Self-employed 3 years, 8 to 12 active clients at any time
- Credit score: 665
- Down payment: $115,000 (25%)
Application:
- Provided tax returns (income averaged to $95,000)
- Lender discounted income by 15% due to variability: $80,750 qualifying income
- Not enough to qualify for desired home with A-lender
- Switched to B-lender using stated income
- Bank statements showed average $9,200/month deposits
- Stated income: $110,400
- Approved by B-lender at 6.4%
Key success factors: Strong down payment, B-lender flexibility, bank statement documentation
Example 3: Trades Contractor (A-Lender Approval with Conditions)
Profile:
- Occupation: Journeyman electrician, project-based contracts
- Income: $108,000 (2023), $118,000 (2024)
- Employment: Self-employed 6 years, Red Seal certified
- Credit score: 695
- Down payment: $70,000 (12%)
Application:
- Provided 2 years of tax returns
- Provided letters from 3 general contractors confirming ongoing relationships
- Showed current contracts totaling $85,000 over next 9 months
- Approved by A-lender at 5.1% with condition:
- Required 15% down instead of 12% due to income variability
- Increased down payment to $87,500
- Approved
Key success factors: Red Seal certification, client letters, strong income history
Tips for Strengthening Your Contractor Mortgage Application
1. Maintain Separate Business and Personal Accounts
If your business income and personal transfers are mixed in one account, lenders cannot clearly identify your income. Separate accounts make income verification cleaner.
2. Keep Contracts and Invoices Organized
Lenders may ask for proof of ongoing work. Have a folder with:
- Current signed contracts
- Invoices from the past 12 months
- Payment confirmations
- Client letters (if applicable)
3. Work With a Broker Who Understands Contractors
Not all brokers have experience with contractor and freelancer applications. Find someone who:
- Has relationships with contractor-friendly lenders
- Understands how to present variable income in the best light
- Can navigate stated income programs if needed
4. Time Your Application Strategically
Best time to apply:
- After filing taxes (March to May) so you have fresh Notices of Assessment
- When you have a new long-term contract in hand
- After a strong income year (if your income fluctuates)
Avoid applying:
- Between contracts (wait until you secure your next contract)
- Immediately after incorporating (wait at least 6 months to show business stability)
5. Prepare a Letter of Explanation
If your income history has gaps, fluctuations, or complexity, write a one-page letter explaining:
- Your industry and occupation
- Why your income varies (seasonal, project-based, etc.)
- Your current contract situation
- Your pipeline of future work
This context helps underwriters understand your situation beyond just the numbers.
FAQ: Contractor and Freelancer Mortgages
Q: Do I need 2 years of self-employed history to qualify? A: For A-lenders, yes. For B-lenders, 12+ months may be sufficient with stated income programs.
Q: Will lenders count my full contract income or just base salary? A: It depends. If you are T4 with guaranteed hours, they count full income. If you are variable hours or self-employed, they average over 2 years and may discount.
Q: Can I qualify if my income dropped last year due to COVID or industry downturn? A: Yes, but lenders will average the two years. If 2023 was $140k and 2024 was $95k, you qualify at $117.5k. You may need to show recent contracts proving income recovery.
Q: Does being incorporated help or hurt my mortgage application? A: Neutral to slightly helpful. Incorporation shows business legitimacy, but you will need corporate financials in addition to personal tax returns.
Final Thoughts
Getting approved for a mortgage as a contractor or freelancer in Alberta is absolutely achievable. Lenders have adapted to the modern workforce — they understand that skilled contractors often out-earn salaried employees and provide critical expertise across industries.
The key is documentation. If you can show 2 years of consistent income, ongoing contracts, and strong credit, A-lenders will approve you at competitive rates. If your situation is more complex, B-lenders offer stated income programs that focus on actual earnings rather than taxable income.
Calgary's economy — especially oil and gas, construction, and tech — relies heavily on contract labor. Lenders in this market understand contractor income structures better than lenders in other cities. Use this to your advantage.
For more self-employed mortgage strategies, see the Self-Employed Mortgage Guide for Canada.
Questions about contractor or freelancer mortgages? Contact Jay: jaysinghmortgage@gmail.com or 403.409.1126.
