Toronto IT Contractor Approved with Insured Stated-Income A-Lender Mortgage

1. Executive Summary

An IT professional in Toronto was buying his primary residence. He earned decent income, but he worked through a corporation as a subcontractor, so lenders treated the file as self-employed. Because he wrote off a significant portion of income, the average of two years of T1 income was not sufficient for standard debt-service ratios. His bank declined the mortgage, and other brokers told him to arrange at least 20% down payment to qualify with a B lender. We recommended an insured stated-income mortgage from an A-side lender. The file was approved without requiring the client to increase the down payment to 20%.

2. Borrower Profile

The borrower was an IT professional buying a primary residence in Toronto. He worked through a corporation as a subcontractor and was therefore classified as self-employed for mortgage purposes. His gross income was stronger than the income shown on his personal tax filings because he wrote off a significant portion of income. Borrower identity, corporation name, income, credit score, and lender name are not disclosed.

3. Property Profile

The transaction involved an owner-occupied residential purchase in Toronto, Ontario. The borrower had approximately 15% down payment. Exact address, purchase price, mortgage amount, rate, down payment amount, insurer, and lender name are not disclosed.

4. The Challenge

The client was buying a primary residence and had approximately 15% down payment. Because he worked through a corporation as a subcontractor, lenders treated him as self-employed. His gross business income was stronger than the income reflected on his personal T1s because he wrote off at least half of his income. His own bank declined the file, and a few brokers told him to arrange at least 20% down payment so he could qualify with a B lender.

5. Why Conventional Solutions Failed

A standard bank review did not work because the borrower’s average two-year T1 income was too low for the required debt-service ratios. This is a common issue for self-employed borrowers who have legitimate business expenses or write-offs. The borrower’s bank declined the file, and other brokers suggested waiting until he could arrange at least 20% down payment for a B-lender solution. That approach would have changed the deal structure and required more cash upfront.

6. Our Analysis

Our analysis focused on whether the file truly required a B lender or whether an insured A-side option was available. The client had a strong professional background and real income, but his taxable income did not fully reflect earning capacity. Because the down payment was below 20%, an insured mortgage path was still possible if the file fit the right business-for-self or stated-income policy. We reviewed the income structure and recommended an insured stated-income mortgage from an A-side lender rather than moving directly to a B-lender structure.

7. Financing Structure

The file was structured as an insured first mortgage through an A-side lender using a stated-income or business-for-self approach under lender and insurer policy. The borrower contributed approximately 15% down payment. Public details do not disclose the lender name, insurer, mortgage amount, premium, rate, amortization, purchase price, or borrower identity.

8. Why the Solution Worked

The solution worked because the borrower’s income issue was not a lack of earning ability; it was a documentation and taxable-income issue. The right insured stated-income program allowed the lender to consider the borrower’s broader self-employed income picture rather than relying only on the average of two-year T1 income. The underwriting principle is that self-employed borrowers should not automatically be pushed to B lenders if an insured A-side program can properly support the file.

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