The client
A separated parent in Belleville repurchasing after separation had $3,500/month of their own income, $650/month in ongoing child support, and $900/month in spousal support that the separation agreement itself ends in under three years.
Own salaried income
$3,500/month
Child support
$650/month
Expected to continue for years
Spousal support
$900/month
Separation agreement ends this in under three years
First lender's pre-approval
$245,000
Counted the full combined support amount
The problem
A first lender pre-approved a $245,000 purchase counting the full combined support figure, without checking that the spousal support portion will stop well before a 25-year amortization is anywhere close to done.
What a documented end date changes
- ▸Child support is expected to continue for years, tied to the children's ongoing needs
- ▸Spousal support here has a specific end date, under three years away, written into the separation agreement itself
- ▸Many lenders will not rely on support income unless it is documented to continue at least three years from the application date -- a common practice, not a universal rule
The pre-approval worked only while every support payment was still arriving. Nobody had checked what the file looked like once one of them stopped.
The numbers
Sizing the purchase to only the income documented to continue is what actually made this file sustainable, not just approvable today.
| Sizing to reliable income only | Amount |
|---|---|
| Original pre-approval | $245,000 |
| Purchase actually sized | $195,000 |
| GDS at the original price | Full combined support | Reliable income only |
|---|---|---|
| Payment at the qualifying rate (6.90%), 25 years | $1,578/mo | $1,578/mo |
| Property tax + heat | $350 | $350 |
| Income used | $5,050/mo | $4,150/mo |
| GDS | 38.2% | 46.5% |
46.5% GDS on the original $245,000 price, once spousal support is excluded, is well over the range most files carry, consistent with average mortgage payment data for a household this size -- sizing down to $195,000 brought GDS to 38.7% on the same reliable income.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the separation agreement's own end date for spousal support as the governing fact, not a detail to work around.
First, confirmed the spousal support's documented end date directly from the separation agreement, distinct from the child support portion, which has no comparable end date.
Second, applied the common lender practice that support income must be documented to continue for at least three years from application to be relied upon, excluding the spousal support entirely.
Third, re-sized the purchase to $195,000, the level the household's own income plus reliable child support alone can actually carry.
The outcome
The repurchase funded insured at 4.90% and 38.7% GDS, on income that will still be there after spousal support ends.
Because this file is insured, CMHC's 39% GDS maximum applies directly; 38.7% clears it on the reliable income alone, without needing the time-limited spousal support at all.
What to take from this file
- 01Child support and spousal support are not the same kind of reliability question. Check each support type's own documented duration separately.
- 02Many lenders require support income to be documented to continue at least three years from application. This is common lender practice, not a universal or regulated rule.
- 03A pre-approval that only works while every support payment is still arriving is not a sustainable number. Size to what continues, not to what is merely present today.
- 04This is the recipient side of support income, not the payor's side. A different, earlier file in this series covers a payor's own support payment reducing their ratios -- a separate question entirely.
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.
Illustrative in this file — lender-specific, not rules:
- ▸4.90% contract rate — rates move daily; not a quote.
- ▸the three-year support-continuance practice — each lender sets its own minimum documented continuance period for support income; three years is common but not a universal or regulated 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.