The client
Buyers purchasing a $615,000 new-build home directly from its builder in St. Catharines-Niagara, at 10% down, with the deposit already paid to the builder's own real estate brokerage.
Purchase price
$615,000, St. Catharines-Niagara
10% down, insured
Deposit paid at offer
$61,500
Held in the vendor's own brokerage trust account
Combined income
$12,000/month
Other debt
$260/mo car loan
The problem
Buying directly from a builder rather than through a resale transaction often means the deposit is paid to the builder's own sales office and held by the builder's own real estate brokerage -- a different custodian, governed by a different set of rules, than the solicitor's trust account most purchase files rely on.
Which trust account actually held the money
- ▸The $61,500 deposit was received and held by the vendor's own real estate brokerage, not a lawyer
- ▸That brokerage's trust obligations run under REBBA 2002 -- Ontario's real-estate-brokerage trust rules -- a separate regime from the Law Society's rules governing a lawyer's trust account
- ▸The construction take-out closing needed proof the deposit was actually received, held, and earmarked for this specific purchase -- proof only the brokerage's own trust ledger could provide
The lender's checklist assumed a solicitor's trust letter, the way most purchase files provide one. This deposit had never touched a lawyer's trust account at all.
The numbers
Once the brokerage's own trust ledger confirmed the deposit, crediting it toward the down payment and completing the insured math was routine.
| The insured new-build purchase | Amount |
|---|---|
| Base mortgage (90% of purchase price) | $553,500 |
| CMHC premium (3.10% at 90% LTV) | +$17,158 |
| Total insured mortgage | $570,658 |
| Ratio check at the qualifying rate | Figure |
|---|---|
| Payment at the qualifying rate (6.95%), 25 years | $3,979/mo |
| GDS (payment + $380 tax + $140 heat) ÷ $12,000 income | 37.5% |
| TDS (GDS numerator + $260 car loan) ÷ $12,000 income | 39.7% |
37.5% and 39.7% sit comfortably inside CMHC's 39% GDS and 44% TDS maximums -- the ratios were never the issue on this file; confirming which trust account actually held the deposit was.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act tracked the deposit to its actual custodian rather than assuming the standard solicitor's trust letter would apply.
First, confirmed with the builder's sales office which entity actually held the deposit -- the vendor's own real estate brokerage, not the closing lawyer.
Second, requested the brokerage's own trust ledger statement, showing the deposit received, the date, and its designation toward this specific purchase, under REBBA's own trust-accounting requirements for real estate brokerages.
Third, provided that statement to the lender in place of a solicitor's trust letter, with the closing lawyer confirming separately that the deposit would be credited against the purchase price at final closing.
The outcome
The take-out mortgage funded insured at 37.5% GDS and 39.7% TDS, with the deposit properly credited once the correct trust custodian's own records confirmed it.
Both ratios sit comfortably inside CMHC's 39% GDS and 44% TDS maximums; the file was never close to either ceiling once the deposit question was resolved.
What to take from this file
- 01A builder deposit often sits with the vendor's own real estate brokerage, not a lawyer. Confirm which entity actually holds the money before assuming a standard solicitor's trust letter will satisfy the lender.
- 02REBBA 2002 governs a real estate brokerage's trust account differently than the Law Society governs a lawyer's. The right proof of a deposit is the document the correct regulator's rules actually produce.
- 03A personal bank statement showing money leaving the buyers' account is not proof it reached a protected trust account. The brokerage's own trust ledger is the document that actually proves it.
- 04Ask early which custodian holds a builder deposit. Confirming this before the take-out closing avoids a last-minute scramble for the right document.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸CMHC — Purchase (Mortgage Loan Insurance) — default-insurance premium schedule by LTV band (25-year amortization).
- ▸CMHC — CMHC Home Start — minimum down payment tiers (5%/10%) and the $1.5M insured price cap.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸CMHC — CMHC Reviews Underwriting Criteria — GDS 39% / TDS 44% maximums and the 600 credit-score floor for insured files.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
- ▸Ontario.ca — Calculating Land Transfer Tax / Land Transfer Tax Refunds for First-Time Homebuyers — Ontario's marginal land transfer tax brackets and first-time-buyer refund.
Illustrative in this file — lender-specific, not rules:
- ▸4.95% contract rate — rates move daily; not a quote.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.