The client
A buyer in Quebec City put $18,250 (5%) down on a $365,000 purchase, with $7,200/month of their own income. Years earlier, they had co-signed a car loan for a sibling who couldn't qualify for financing alone; both names remain on the note today.
Purchase price
$365,000
Quebec City
Down payment
$18,250 (5%)
Maximum-LTV insured file
Applicant's income
$7,200/month
On its own, without the co-signed debt
Co-signed car loan
$410/month
Every payment made by the sibling, not the applicant
The problem
This was never a case of fraud or a misattributed collection — the loan is genuinely, legitimately joint. The applicant's name is on the note because a lender required a co-signer years ago, and it has stayed there since. The trouble is that a lender's ratio calculation, by default, counts a co-signed debt in full against every name on it, regardless of who has actually been paying.
Why the full $410 nearly killed the file
- ▸The applicant's own income supports the mortgage comfortably on its own
- ▸Counting the co-signed car loan at its full $410/mo payment pushes total debt service to 44.3%, over CMHC's 44% maximum
- ▸The applicant had never made a single payment on the loan themselves -- the sibling had, every month, for years
As co-signed debt showing on both bureaus illustrates, this is a routine bind, not a rare one: the debt shows on the applicant's file exactly as if it were theirs, whether or not a dollar of it ever came from their account.
The numbers
The mortgage math itself barely changed. What changed was whether one $410 monthly obligation belonged in the calculation at all.
| The insured purchase, before and after the exclusion | Amount |
|---|---|
| Purchase price | $365,000 |
| Down payment (5%) | $18,250 |
| Base mortgage | $346,750 |
| CMHC premium — 4.00% at 90.01-95% LTV | +$13,870 |
| Total insured mortgage | $360,620 |
| Total debt service | Loan counted in full | Loan excluded |
|---|---|---|
| Qualifying payment at 6.55% (MQR) | $2,426/mo | $2,426/mo |
| Property tax and heat | $355 | $355 |
| Co-signed car loan | $410 | — |
| Total debt service | 44.3% | 38.6% |
GDS never moved — it holds at 38.6% either way, since a car loan was never part of that calculation to begin with. The whole swing sat inside total debt service, and it moved by exactly $410 of monthly obligation, nothing else.
The solution
A courtier hypothécaire licensed under Quebec's AMF treated the documentation gap, not the debt itself, as the thing to fix.
First, confirmed the lender's actual policy for excluding a co-signed debt. Most lenders will exclude a jointly-held debt from one co-signer's ratios entirely if the other party can prove, in writing, that they have made every payment for a defined trailing period — commonly 12 months.
Second, gathered 12 months of the sibling's own bank statements. Each statement showed the same $410 payment leaving the sibling's account on the note's due date, month after month, with no contribution ever coming from the applicant's own accounts.
Third, submitted the proof without touching the loan or the co-signature itself. Nothing about the loan's registration, the sibling's ownership of the vehicle, or the applicant's name on the note changed — only how the debt counted in this one file's ratios.
The outcome
The lender excluded the $410 payment from the applicant's ratios once the 12-month proof was in hand. Total debt service fell from 44.3% to 38.6%, comfortably inside CMHC's 44% maximum, and Quebec's welcome tax on the purchase came to $3,586.
The co-signature itself was never released -- if the sibling ever missed a payment, the applicant would still be legally on the hook for it. Only this file's ratio treatment changed.
What to take from this file
- 01A genuinely joint debt is not the same problem as a misattributed one. There's no fraud or bureau error to dispute here -- just a documentation path most lenders already have a policy for.
- 02Twelve months' proof of the other party's payments can exclude a debt from ratios entirely. That's a different, faster fix than removing a co-signature, which usually requires refinancing the underlying loan.
- 03GDS and TDS don't always move together. A car loan only ever touches TDS; excluding it left GDS exactly where it started.
- 04The co-signature itself stays intact. Excluding a debt from one file's ratios is not the same as being released from legal liability for it.
- 05Ask about old co-signed obligations early. A years-old favour for a sibling can sit quietly on a bureau file until a mortgage application brings it back into the math.
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.
- ▸Gouvernement du Québec — Droits sur les mutations immobilières — Quebec's transfer duties ('welcome tax') — 2026 indexed brackets.
- ▸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:
- ▸4.55% contract rate — rates move daily; not a quote.
- ▸the 12-month payment-proof exclusion — each lender sets its own documentation threshold for excluding a co-signed debt from ratios; 12 months is common but not universal.
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.