Self-Employed and Behind on Taxes? Mortgage Options in Ontario (2026)

If you run your own business in Ontario and you've fallen behind on taxes, you're in good company — self-employed people make up the majority of CRA debt cases. Income is lumpy, instalments are easy to miss, and a single slow year can snowball into a balance the CRA is now chasing. The good news: if you own a home, your equity is usually the way out, and being self-employed doesn't disqualify you.

The short answer

You can clear CRA tax debt by borrowing against your home — through a refinance, second mortgage, or private mortgage — even if you're self-employed and even if a bank has declined you. Equity-based lenders look primarily at your home's value rather than your Notice of Assessment, which is exactly why this works when traditional income proof is thin. See CRA tax debt options for the self-employed.

Why self-employed homeowners fall behind

It's rarely carelessness. The CRA expects quarterly instalments, HST/GST gets spent before it's remitted, and a strong year creates a tax bill that lands in a weaker one. Add daily-compounding CRA interest and a balance that felt manageable becomes urgent fast. Understanding what the CRA can do if you don't pay — frozen accounts, garnishment, a lien — is what makes acting early worth it.

Why banks say no (and equity lenders say yes)

A-lenders underwrite on documented income — typically two years of Notices of Assessment with no taxes owing. If you're behind on taxes, that box can't be ticked, and many self-employed borrowers write down income for tax efficiency, which makes their "paper" income look smaller than their real cash flow. Alternative and private lenders flip the priority: they lend against the equity in your home, so a thin NOA or an outstanding CRA balance isn't a dealbreaker. See our self-employed mortgage options.

Your options

1. Refinance (if no lien yet)

If the CRA hasn't registered a lien and you have equity, a B-lender refinance can pay the tax debt in full and roll it into one mortgage payment. How refinancing works.

2. Second mortgage

Keep your existing first mortgage and add a second mortgage for just the amount you owe the CRA — useful when breaking the first triggers a big penalty.

3. Private mortgage

If the CRA has already registered a lien, or speed matters, a private mortgage funds against your equity, pays the CRA directly, clears the lien, and gives you a short term (usually a year) to get your filings current and refinance back to a bank. This is the most common path for self-employed CRA cases.

A realistic plan: clear it, then climb back to an A-lender

Think of equity financing as a bridge, not the destination. The play is: pay the CRA in full now to stop the daily interest and collection, use the next 12 months to file your returns, show clean books, and rebuild documented income — then refinance to a lower bank rate. Done right, the private or B-mortgage is a one-year detour, not a permanent cost. If your credit also took a hit along the way, that's still workable; see bad-credit mortgage paths.

How much equity do you need?

Banks typically lend to 80% of your home's value; private lenders often to about 85%. Subtract everything owed against the home — mortgage, CRA debt, any liens — from roughly 80–85% of its value to gauge your room. Most homeowners with a few years of ownership have enough.

Frequently asked questions

Can I get a mortgage if I'm self-employed and owe the CRA?

Yes. Alternative and private lenders lend against your home's equity rather than your tax documents, so an outstanding CRA balance doesn't stop you from refinancing to pay it off.

Do I need two years of tax returns?

Not for equity-based lending. A-lenders want two years of clean Notices of Assessment, but B-lenders and private lenders focus on your equity and the property — which is why this route works when you're behind on filing.

Will paying the CRA with a mortgage cost more than a payment plan?

Usually it costs less. CRA interest compounds daily at a rate well above mortgage rates, so even a private mortgage is often cheaper than carrying the debt — and it stops garnishment and account freezes.

What if the CRA already has a lien on my home?

A private mortgage can still fund: the lender pays the CRA at closing, the lien is discharged, and clear title is restored. See how to remove a CRA lien.

Self-employed and behind on taxes? Explore CRA tax debt mortgage solutions or talk to us confidentially — we'll run the numbers and map a path back to an A-lender.