The client
A newcomer permanent resident in North Bay put $50,500 (10%) down on a $505,000 purchase, with a $9,900/month base salary confirmed by a signed letter of employment. The same employer, a multinational's foreign parent company, had also granted a package of RSUs that hadn't vested yet.
Purchase price
$505,000
North Bay
Down payment
$50,500 (10%)
Insured file
Confirmed base salary
$9,900/month
Per a signed offer letter
RSU grant
Unvested, foreign-parent-company equity
None had vested yet
What actually inflated the file
A $1,400/mo monthly-equivalent added for unvested RSUs
Never guaranteed, liquid, or in CAD
The problem
The applicant's own Canadian salary was never in question — a signed offer letter confirmed $9,900/month before the file even reached underwriting. But a first lender's automated qualifying income tool also added a $1,400/month monthly-equivalent figure, spread from the value of RSUs the foreign parent company had granted — equity that hadn't vested, wasn't liquid, and wasn't denominated in Canadian dollars.
Why unvested equity doesn't belong in monthly income
- ▸Unvested RSUs can be forfeited entirely if employment ends before the vesting date
- ▸Even once vested, RSU value is tied to a share price that moves — and here, a foreign currency that moves independently of it
- ▸Neither condition describes guaranteed monthly cash income the way a base salary does
A newcomer's short Canadian tenure makes this exclusion especially strict — there's no multi-year averaging history the way an established employee's variable pay might sometimes get smoothed.
The numbers
Because this is an insured file, CMHC's ratio maximums bind directly — the comparison below is what actually changed once the unvested RSU estimate was excluded.
| Qualifying on salary alone vs. the mistaken RSU add-on | Amount |
|---|---|
| Purchase price | $505,000 |
| Down payment (10%) | $50,500 |
| Base mortgage | $454,500 |
| CMHC premium — 3.10% at 85.01-90% LTV | +$14,090 |
| Total insured mortgage | $468,590 |
| Qualifying income and ratios | Salary alone (correct) | Salary + mistaken RSU add-on |
|---|---|---|
| Qualifying income | $9,900/mo | $11,300/mo |
| Payment at 6.65% (MQR), 25 years, plus $290 tax/$125 heat | $3,596 | $3,596 |
| TDS (housing + $255 car loan) ÷ qualifying income | 38.9% | 34.1% |
The mistaken pass understated TDS at 34.1% — making the file look stronger than it actually is by crediting equity the applicant doesn't yet own. The true 38.9% still sits comfortably inside CMHC's 44% maximum on the salary alone.
The solution
A mortgage agent treated the RSU grant as a future consideration to disclose, never as current income to qualify on.
First, obtained the RSU grant's own vesting schedule. It confirmed none of the equity had vested as of the application date.
Second, confirmed the grant's own forfeiture terms. Leaving the employer before vesting would forfeit the unvested portion entirely — the opposite of guaranteed income.
Third, resubmitted qualifying strictly on the signed offer letter's base salary. The RSU grant was disclosed for context, mentioned only as a future consideration, never entered into the ratio calculation.
The outcome
The lender qualified the file on the $9,900 base salary alone. GDS settled at 36.3% and TDS at its true 38.9% — higher than the understated 34.1% the mistaken first pass produced, and still comfortably inside CMHC's maximums. Ontario's land transfer tax on the purchase came to $6,575.
If and when the RSUs actually vest, a future lender could consider documented, sold, liquid proceeds on their own merits — but that's a different file, on a different date, not this one.
What to take from this file
- 01Unvested equity compensation is not income. It can be forfeited outright, and even once vested its value moves with a share price and, often, a foreign currency.
- 02A monthly-equivalent estimate spread from an asset's value is a red flag, not a formula. Deposit-based or asset-spreading tools built for self-employed income don't belong on a straightforward salaried file.
- 03A lower stated ratio isn't automatically the safer one. The understated 34.1% looked better on paper while resting on income that doesn't exist yet.
- 04Newcomers get less benefit of the doubt on variable pay. Without years of Canadian history to average against, unvested equity has nothing to be smoothed by.
- 05Ask explicitly whether any offer includes equity, and get the vesting schedule up front. A base salary and an equity grant need to be documented, and qualified, completely separately.
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.
- ▸Ontario.ca — Calculating Land Transfer Tax / Land Transfer Tax Refunds for First-Time Homebuyers — Ontario's marginal land transfer tax brackets and first-time-buyer refund.
- ▸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:
- ▸4.65% contract rate — rates move daily; not a quote.
- ▸the $1,400/mo mistaken RSU figure — this is a first reviewer's error, not a lender policy or a rule — the specific monthly-equivalent a tool would spread unvested equity over is illustrative of the error, not a formula.
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.