The client
A buyer in Belleville purchased a $380,000 legal duplex at 10% down, intending to live in one unit and rent the other.
Purchase price
$380,000, Belleville
10% down, insured
Original rent survey
$1,900/month
Drawn from active online listings -- asking prices
Corrected rent survey
$1,550/month
Drawn from the same comparable units' actual signed leases
Buyer's own income
$6,900/month
Other debt
$195/mo car loan
The problem
An appraiser's rent survey is only as reliable as the comparables it draws from. The original survey for this duplex's second unit pulled its comparable figures from active online rental listings -- asking prices -- rather than what those same comparable units actually rent for under signed leases, before any negotiation or incentive is factored in.
Asking is not the same fact as achieved
- ▸An active listing shows what a landlord is asking for -- not what a tenant actually agreed to pay once a lease was signed
- ▸The comparable units the appraiser cited had signed leases on file, at figures meaningfully below their own current asking prices
- ▸The gap between asking and achieved rent is exactly the kind of comparable-selection error a lender's own underwriting would eventually have caught -- just later, and more disruptively
Nobody disputed that the comparable units existed, or that they were genuinely comparable. The dispute was over which of two very different numbers each one actually rents for.
The numbers
The qualifying mortgage payment never changed. Only which rent figure got added to income, through the add-back, did.
| The insured purchase | Amount |
|---|---|
| Base mortgage (90% of purchase price) | $342,000 |
| CMHC premium (3.10% at 90% LTV) | +$10,602 |
| Total insured mortgage | $352,602 |
| Ratio check at the qualifying rate | Asking-rent survey | Achieved-lease survey |
|---|---|---|
| Payment at the qualifying rate (6.95%), 25 years | $2,459/mo | $2,459/mo |
| 50% add-back on the second unit's rent | $950/mo | $775/mo |
| GDS | 36.4% | 37.3% |
| TDS | 38.9% | 39.8% |
Both versions clear CMHC's 39% GDS and 44% TDS maximums, but the margin the corrected, signed-lease figure leaves is meaningfully tighter -- exactly the kind of gap a broker wants to know about before closing, not after underwriting flags it, and worth watching closely wherever rental vacancy rate data shows a market tight enough to push asking rents above what leases actually settle at.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the rent survey's own comparable selection as something to check before the file reached underwriting, not after, the same discipline behind every one of the standard rental income offset methods.
First, compared the appraiser's cited comparable units against their own current online listings and noticed the survey's figures matched asking prices almost exactly.
Second, requested a revised survey built from the same comparable units' actual signed leases, net of any move-in incentive, rather than what those units were currently being marketed at.
Third, re-ran the file's ratios against the corrected figure before submission, confirming the file still cleared CMHC's maximums at the tighter, more accurate margin.
The outcome
The purchase funded insured at 37.3% GDS and 39.8% TDS, on a rent figure the file could actually stand behind rather than one the market's own asking prices had inflated.
Both figures sit inside CMHC's 39% GDS and 44% TDS maximums; on the original, asking-rent-based survey the numbers would have looked slightly stronger (36.4% GDS, 38.9% TDS) but on a figure the achieved leases did not actually support.
What to take from this file
- 01An active listing shows an asking price, not an achieved rent. Confirm a rent survey's comparables are drawn from signed leases, not what similar units are currently marketed at.
- 02Overstated comparables can make a file look stronger than it actually is -- catching the gap before underwriting is a service to the client, even when the corrected figure still clears.
- 03A quick cross-check of an appraiser's cited comparables against their own current listings is a fast way to catch this before the file is submitted.
- 04Each lender publishes its own add-back or offset convention -- but whichever convention applies, it is only as reliable as the rent figure it is applied to.
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:
- ▸4.95% contract rate — rates move daily; not a quote.
- ▸the 50% add-back convention — each lender publishes its own rental-income treatment; there is no 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.