The client
A rental in Sherbrooke, Quebec, valued at $340,000, has never been titled to its owner personally — it sits inside a numbered holding company, set up years ago on an accountant's advice, existing mortgage $190,000, refinancing to $210,000 for a top-up.
Property value
$340,000
Sherbrooke, titled to a numbered holding company
Existing mortgage
$190,000
Held in the corporation's name
New refinanced balance
$210,000
Same corporate title, $20,000 top-up
Shareholder's personal income
$5,200/month
Employment income
Corporation's net rental income
$2,100/month
Per its own financial statements
The problem
Every other rental file in this corpus is titled to an individual, with the rent showing up on that individual's own T1 return. This one isn't. Because the property is corporately held, the lender wouldn't underwrite on the corporation's covenant alone — it required the sole shareholder's personal guarantee, and it qualified the file off the shareholder's personal income plus the corporation's OWN net rental income, taken from its financial statements, not a personal rental line.
What corporate title changed about the file
- ▸The corporation's covenant alone wasn't enough for the lender -- the shareholder had to personally guarantee the mortgage
- ▸Qualifying income came from TWO sources: the shareholder's personal T4 income, and the corporation's own net rental income per its financial statements
- ▸Neither figure alone told the full story -- the file needed both, assembled from two different sets of documents
None of this made the file impossible — it made it slower and more document-heavy, because a corporately-held rental simply doesn't produce the single, familiar personal-tax-return rental line most lenders' systems are built around.
The numbers
Qualifying income here came from combining two different sources, not reading one line off a personal return.
| Sizing the refinance | Amount |
|---|---|
| Existing mortgage balance | $190,000 |
| New refinanced balance | $210,000 |
| Top-up | $20,000 |
| Qualifying income and debt service | Figure |
|---|---|
| Shareholder's personal income | $5,200/mo |
| Corporation's own net rental income | $2,100/mo |
| Combined qualifying income | $7,300/mo |
| New payment at the qualifying rate (7.20%) | $1,497/mo |
| Total debt service (payment + tax + heat + car loan) ÷ income | 29.3% |
The refinanced $210,000 sits at 61.8% of the property's $340,000 value — well inside any lender's comfort zone on its own. The obstacle on this file was never the loan-to-value or the debt service; it was assembling the corporate financials alongside the shareholder's personal documents in a form the lender's underwriting could actually process.
The solution
A courtier hypothécaire licensed under Quebec's Act respecting the distribution of financial products and services treated the corporate structure as a documentation project, not a reason to consider moving title.
First, confirmed with the lender upfront that a personal guarantee, not a change of title, would satisfy its policy. Moving the property out of the holding company would have triggered its own legal and tax consequences the household had no interest in taking on.
Second, assembled the corporation's financial statements showing its own net rental income, alongside the shareholder's personal income documents. Two separate document sets, presented together, gave the underwriter the combined qualifying income it needed.
Third, had the shareholder sign the personal guarantee as part of the closing. This was the one structural change the lender actually required — everything else about the corporate ownership stayed exactly as it was.
The outcome
The refinance funded at 5.20%, uninsured, still titled to the holding company, with the shareholder's personal guarantee in place. Total debt service, combining personal and corporate income, came to 29.3%.
Because this is an uninsured refinance on a corporately-held rental, CMHC's ratio maximums don't apply here; the 29.3% figure reflects the combined personal-and-corporate serviceability the lender actually underwrote to, not a regulatory pass/fail line.
What to take from this file
- 01A corporately-held rental doesn't qualify the way a personally-held one does. There is no personal T1 rental line to read — qualifying income has to be assembled from the corporation's own financial statements instead.
- 02Expect a personal guarantee requirement on a corporately-titled 1-4 unit rental. Not every lender in the Canadian mortgage market will finance one at all, and those that do commonly want the shareholder's personal covenant behind the corporation's.
- 03Combine personal and corporate income carefully, from two separate document sets. Neither the shareholder's T4 alone nor the corporation's rental income alone tells the full qualifying picture.
- 04A personal guarantee is not the same as a change of title. Satisfying the lender's requirement didn't require moving the property out of the holding company or triggering any of the tax consequences that would come with it.
- 05Confirm the lender's corporate-ownership policy before shopping the file. Not every lender underwrites corporately-held residential rentals; knowing which ones do saves real time.
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.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸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:
- ▸5.20% contract rate — rates move daily; not a quote.
- ▸requiring a personal guarantee on a corporately-held rental — each lender sets its own policy for corporately-titled 1-4 unit residential property; not every lender will finance one at all.
- ▸the TDS figure — this file is uninsured, so there is no CMHC ratio ceiling -- the number is informational, not a pass/fail line.
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.