An asset once, not an income twice

A deposit-based income tool -- built to corroborate self-employed or informal income by pattern-matching bank activity -- mistakenly treated a slice of the one-time foreign pension lump sum as if it were a recurring monthly deposit, adding $1,200/month onto an applicant who was never self-employed at all and had no informal income to corroborate.

This is the opposite of most newcomer files' usual risk -- rather than understating a real income source, the deposit-based tool overstated one that was never income at all, which can be just as much of a problem if it goes uncaught.

Because this file is uninsured, CMHC's ratio maximums don't apply directly -- the comparison below is what changed once the lump sum was correctly excluded.

The mistaken pass looked stronger, at 36.5% TDS, only because it counted income the applicant does not actually have every month. The corrected 41.5% is the true, lower-income figure -- and it still clears comfortably, so the fix here didn't change the outcome, only made it honest.

A mortgage associate working under RECA treated the deposit-tool flag as a documentation question, not evidence the applicant had extra income to lean on.

First, identified the source of the $1,200/month figure. The deposit-based tool had spread a portion of a single large deposit -- the pension lump sum -- across several months as if it recurred.

Second, documented the pension commutation with the foreign plan administrator's own statement and the wire confirmation. Both showed a single, dated payment, not a recurring benefit.

Third, excluded it from income entirely while keeping it fully eligible as a down-payment source. An asset used once for a down payment does not become income just because it passed through a bank account.

The file funded on the applicant's own $8,800/month salary alone, with the true TDS settling at 41.5% -- higher than the understated 36.5% the mistaken first pass produced, and still comfortably serviceable. Alberta charges no land transfer tax; registration fees apply on a sliding scale, which this file left qualitative rather than quoted as a dollar figure, consistent with national down payment statistics that never break the figure out by source.

The $1,200/month figure was a first reviewer's error, not a lender policy -- the specific monthly-equivalent a deposit-based tool would spread a lump sum over is illustrative of the mistake, not a formula.

• 01A one-time asset is not the same thing as recurring income. A foreign pension lump sum can fund a down payment without ever entering the income side of the ratios.
• 02A deposit-based income tool built for self-employed files can misfire on a salaried applicant. It has no reason to run at all on a fully-documented T4 income.
• 03A ratio that looks better because of a mistake is still a mistake. The understated 36.5% was wrong in the direction that makes a file look easier to approve, which is its own kind of risk.
• 04Document a lump sum's one-time nature explicitly. A plan administrator's statement and a wire confirmation are what separate an asset from an income stream on paper.
• 05Ask whether any large deposit is genuinely one-time before a system decides otherwise. A newcomer's pension, severance, or business-sale proceeds are common sources a deposit-based tool can misread.