The client
A Saint John, New Brunswick applicant with $3,200/month of their own T4 income, receiving $2,200/month in spousal support under a written separation agreement — a temporary rate that runs for three years from the date the agreement was signed, then steps down permanently to $1,400/month once that period ends.
Applicant's own income
$3,200/month
T4, stable
Support — temporary rate
$2,200/month
Months 1–36 of the separation agreement only
Support — durable rate
$1,400/month
Permanent, from month 37 onward
As first discussed
$265,000 purchase, 10% down
Property tax $240/mo; lender heat estimate $110/mo
Other debt
$200/mo
Unchanged across both structures
The problem
Fourteen months had already passed since the separation agreement was signed, leaving roughly twenty-two months of the temporary $2,200 rate still to run — short of the three-year forward window most lenders want to see before counting a support payment at its current level in full. The qualifying income question was never whether the applicant receives $2,200 today; it was whether a mortgage sized around $2,200 could still be serviced once it drops to $1,400.
The same file, two support figures
- ▸On the temporary $2,200/mo figure: GDS 37.7% — comfortably inside CMHC's 39% maximum
- ▸On the durable $1,400/mo figure: GDS 44.2% — over the 39% maximum
- ▸Both figures describe the same $265,000 purchase; only the income used to test it changes
A lender qualifying purely on the current deposit would have approved a file that could not survive its own support schedule — a version of the same trap a step-down support arrangement is built to avoid for the household, but that a mortgage sized around the wrong number can recreate anyway.
The numbers
The purchase as first discussed used a standard 10% down payment. Run against the average Canadian mortgage payment, nothing about $265,000 in Saint John looks unusual — the problem was entirely on the income side of the ratio, not the property.
| The purchase as first discussed | Amount |
|---|---|
| Purchase price | $265,000 |
| Down payment (10%) | −$26,500 |
| Base mortgage (90% LTV) | $238,500 |
| CMHC premium at 3.10% (85.01–90% LTV band) | +$7,394 |
| Total insured mortgage | $245,894 |
| Total debt service, as first discussed | On the temporary support | On the durable support |
|---|---|---|
| Qualifying payment, 25 years | $1,684 | $1,684 |
| Property tax + heat | $350 | $350 |
| GDS vs. the 39% cap | 37.7% ✓ | 44.2% ✗ |
Resizing to a purchase the durable support can actually carry
| The resized purchase | Figure |
|---|---|
| Purchase price | $235,000 |
| Down payment (15%) | $35,250 |
| Base mortgage (85% LTV) | $199,750 |
| CMHC premium at 2.80% (80.01–85% LTV band) | $5,593 |
| Total insured mortgage | $205,343 |
| Ratio check, durable support only | Figure |
|---|---|
| Qualifying payment, 25 years | $1,407 |
| GDS (payment + tax + heat) ÷ $4,600 durable income | 38.2% |
| TDS (GDS numerator + $200 other debt) ÷ $4,600 | 42.5% |
38.2% and 42.5% both clear CMHC's maximums using only the $1,400/mo support rate that will still be there in year four and every year after — the temporary $2,200 rate was never load-bearing in the resized file at all.
The solution
An FCNB-licensed New Brunswick mortgage broker treated the support schedule as the file's central fact, not a footnote.
First, read the separation agreement's support clause on its own terms. A three-year temporary rate stepping down to a permanent one is common in agreements designed to fund a spouse's return to the workforce — but it means the current deposit amount is not the number a 25-year mortgage should be built around.
Second, applied a forward-looking continuance test before counting anything in full. With only twenty-two months of the temporary rate left, it fell short of a three-year window; the durable $1,400 rate, being permanent, cleared it easily.
Third, resized the purchase itself rather than search for a lender willing to stretch the temporary figure. A larger down payment and a smaller price brought the file back under CMHC's caps using only income that will genuinely still be there.
The outcome & the closing math
Approved and funded: insured at 85% LTV, with GDS at 38.2% and TDS at 42.5%, using only the support figure that survives past the three-year mark.
| Cash due at closing (beyond the down payment) | Amount |
|---|---|
| New Brunswick's flat 1% real property transfer tax on $235,000 | $2,350 |
| Legal fees and adjustments | varies |
What to take from this file
- 01A step-down support schedule means two qualifying-income numbers exist on the same file. Only the one that survives the mortgage's early years should carry it.
- 02A three-year forward-looking continuance test is a common convention for counting support income — not a codified rule, but a reasonable one to apply before a temporary figure disappears mid-amortization.
- 03A file that passes on today's deposit can still be unsustainable. 37.7% looked comfortable; the same purchase on the durable income alone was 6.5 points over the cap.
- 04Resize the purchase, don't stretch the income. A larger down payment and a smaller price fixed this file without needing a lender willing to count a support rate that was already scheduled to end.
- 05Read the support clause itself, not just the current deposit. The agreement named both figures and the exact date they switch — the file only needed someone to use both of them.
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:
- ▸4.75% contract rate — rates move daily; not a quote.
- ▸the three-year minimum-continuance window for support income — each lender/insurer sets its own minimum remaining-term test for counting support income in full; three years forward is a common convention, not a codified universal rule.
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.