The client
A buyer in Bathurst had clean personal credit, but a family member's credit card, carrying a $25,000 balance, appeared on the applicant's own bureau file — because the applicant was an authorized user on it, never a joint or primary cardholder, and never legally liable for a dollar of the balance.
Applicant's income
$6,100/mo
Own credit clean
Authorized-user card
$25,000
Family member's card; applicant never liable
Purchase
$255,000, Bathurst
Property tax 220/mo; heat estimate 100/mo
Down payment
$25,500 — 10%
Insured file, 90% LTV
The problem
An authorized-user tradeline shows up on the applicant's bureau report, but it is not the applicant's legal debt — the primary cardholder alone is responsible for it. A first lender's automated read did not draw that distinction, and counted the card's minimum payment straight into the applicant's own total debt service ratio anyway.
The ratio, with the wrong debt included
- ▸Authorized-user card's minimum payment, counted against TDS: $750/mo
- ▸TDS with it counted: 45.6% — over the insured 44% maximum
- ▸Applicant's actual own credit-card minimum: a small $60/mo, never in question
The gap between a declined file and an approved one was entirely a debt the applicant had no legal obligation to pay — not a ratio problem the household had actually created.
The numbers
The mortgage structure itself never changed — only which debts belonged on the applicant's own ratio did.
| The insured loan | Amount |
|---|---|
| Purchase price | $255,000 |
| Down payment (10%) | −$25,500 |
| Base mortgage (90% LTV) | $229,500 |
| CMHC premium — 3.10% in the 85.01–90% LTV band, capitalized | +$7,114 |
| Total insured mortgage | $236,614 |
| Total debt service | As submitted | Once corrected |
|---|---|---|
| Payment at the qualifying rate | 1,650 | 1,650 |
| Tax and heat | 320 | 320 |
| Authorized-user card minimum | $750 | — (excluded, not the applicant’s debt) |
| Applicant's own credit-card minimum | $60 | $60 |
| TDS vs. the 44% cap | 45.6% ✗ | 33.3% ✓ |
The solution
An FCNB-licensed mortgage broker documented the applicant's actual legal relationship to the card before resubmitting.
First, confirmed in writing that the applicant was an authorized user only — the card issuer's own records showed the family member as the sole primary and legally liable cardholder.
Second, placed the file with a lender whose policy excludes authorized-user debt once non-liability is documented, rather than resubmitting to the same lender and hoping for a different automated read.
The outcome & the closing math
With the authorized-user debt excluded, TDS fell to 33.3%, comfortably inside CMHC's 44% maximum, and the file funded insured.
| Cash due at closing (beyond the down payment) | Amount |
|---|---|
| New Brunswick's flat 1% real property transfer tax on $255,000 | $2,550 |
| Legal fees, title insurance & adjustments | varies |
What to take from this file
- 01An authorized user is not automatically liable for the debt. Being on a card's account is not the same as being responsible for its balance.
- 02Each lender sets its own policy on authorized-user debt. Some count it by default; some exclude it once non-liability is documented in writing.
- 03Document liability, not just the tradeline. A statement from the card issuer naming the actual primary cardholder is the evidence that moves a file.
- 04A ratio failure isn't always a spending problem. Here it was an attribution problem the applicant never created.
- 05New Brunswick's transfer tax is a flat 1% on the greater of the sale price or the assessed value — simpler than the marginal brackets used in several other provinces.
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.
- ▸Real Property Transfer Tax Act, S.N.B. (via laws.gnb.ca) — New Brunswick's flat 1% real property transfer tax.
- ▸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.
Illustrative in this file — lender-specific, not rules:
- ▸4.95% contract rate — rates move daily; not a quote.
- ▸excluding authorized-user debt once non-liability is documented — each lender sets its own policy for whether and when to exclude an authorized-user tradeline.
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.