The challenge

Sarah and Ben purchased their second rental property for $849,000, in Nepean, ON. The home is a bungalow with a legal basement apartment. They did, however, have difficulty qualifying at their current financial institution due to servicing requirements.

Their backstory

Ben and Sarah are a married couple. Ben is a realtor, and Sarah is a full-time salaried employee with a major company. Ben has A1 credit, with a beacon score of 782, and Sarah has had some minor late payments, but all her recent history is clean, with a good beacon score of 684. They are good savers, but found it difficult to qualify for their second rental purchase due to qualification guidelines at their current financial institution, given Ben’s commission income and additional rental expenses.

Our view

We saw two solid applicants who are positioning themselves well for the future. Sarah’s income has always been consistent, and Ben has been a successful realtor for more than five years. In fact, his income level has been increasing each year, and we considered a two-year average of his actual earned commission income in servicing (based on T4As). Since their existing rental property has good equity and steady tenants, this allowed us to consider up to 100% rental offset for their non-subject rental property in servicing. 

Approval details

• LTV: 65%
• Amortization: 25 years
• Income: 
  • Two-year T4A average for commission income and a letter of employment for Ben
  • Salary letter and paystub for Sarah
• Lease agreement for existing rental
• Appraiser to comment on market rents for new rental purchase
• Down payment from savings