Brantford Single Mother Approved by B Lender Using YTD Income Exception

1. Executive Summary

A single mother in Brantford wanted to purchase her primary residence. She was making decent income through overtime and commissions even though her base salary was low. The challenge was that lenders usually use a two-year T4 average for overtime and commission income. Unfortunately, one year was affected by COVID-related work shutdowns, and the other year was affected by a road accident that prevented her from working as much as usual. As a result, the T4 average did not support the purchase. Her credit score was also low. We approached a B lender, explained the situation, provided the last 12 months of pay slips and bank statements, and asked the lender to consider an exception because her YTD income was strong. The lender accepted the explanation and approved the file on exception basis.

2. Borrower Profile

The borrower was a single mother purchasing her primary residence in Brantford, Ontario. She had a low base salary but earned meaningful income through overtime and commissions. Her historical T4 income was distorted by COVID-related work shutdowns in one year and a road accident in another year. Her credit score was also on the lower side. Borrower identity, employer, income figures, credit score, accident details, and lender name are not disclosed.

3. Property Profile

The mortgage was for the purchase of an owner-occupied primary residence in Brantford, Ontario. Exact address, purchase price, down payment, mortgage amount, loan-to-value, rate, term, amortization, and lender name are not disclosed.

4. The Challenge

The client had a strong current income story, but the standard two-year T4 average did not reflect her actual earning capacity. Her overtime and commission income were important, but one historical year was affected by COVID shutdowns and another by a road accident. As a result, the two-year average looked too low. Her lower credit score added another layer of difficulty. The file needed a lender willing to look beyond the standard average and consider current documented income performance.

5. Why Conventional Solutions Failed

A standard A-lender approval was not viable because the two-year T4 average did not support the required income and the borrower’s credit score was low. The issue was not that the client had no income. The issue was that her normal earning pattern relied on overtime and commissions, while the two historical years used for averaging were affected by unusual events. If the lender only used the T4 average mechanically, the file would not work.

6. HopeWell’s Analysis

Our analysis focused on whether the historical average accurately represented the borrower’s current ability to earn. The answer was no. One year was affected by COVID shutdowns, and another was affected by a road accident. Her current year-to-date income was much stronger and better reflected her current work pattern. We collected 12 months of pay slips and bank statements to show current income consistency and presented the file to a B lender with a clear exception request.

7. Financing Structure

The file was structured as a B-lender purchase mortgage. The lender reviewed the borrower’s current year-to-date income, last 12 months of pay slips, last 12 months of bank statements, historical T4s, credit profile, and explanation for the disrupted income years. Public details do not disclose the lender name, mortgage amount, rate, term, amortization, purchase price, down payment, income figures, or credit score.

8. Why the Solution Worked

The solution worked because the lender understood that the T4 average was not representative. The borrower had current documented income, and the reasons for the weak historical years were specific and explainable. The B lender accepted that explanation and approved the file on exception basis. The underwriting principle is that exceptions are strongest when the broker can clearly show why the standard calculation is misleading and provide documents supporting the current income reality.

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