The rent that might not survive a ruling

A rented unit's current lease amount is not the only fact a lender looks at when qualifying an investment property unit inside an owner-occupied duplex. This unit's tenant had an active, unresolved application before the Landlord and Tenant Board alleging maintenance issues and seeking a rent abatement -- an outcome that could reduce the rent, retroactively or going forward, well below the $1,650/month the lease itself stated.

The lease said $1,650. Nobody -- not the landlord, not the tenant, not the lender -- could say with certainty that the unit would keep collecting that amount.

Counting only a conservative portion of the contested unit's rent still cleared the file comfortably.

35.8% and 38.6% sit comfortably inside CMHC's 39% GDS and 44% TDS maximums, even counting only the conservative $950/mo figure -- a margin consistent with what rental vacancy rate data suggests a well-located secondary unit can typically support. The pending LTB application was a documentation question, not a ratio problem.

A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the active LTB application as a fact to disclose and account for conservatively, not a detail to leave out of the file -- the same insured A-lender channel that, per lender-type market share data, carries most owner-occupied duplex purchases like this one.

First, disclosed the pending application to the lender directly, rather than submitting the lease at face value and letting an underwriter discover it independently.

Second, obtained the lender's written policy for counting rent on a unit with an active tenant dispute, confirming the specific reduced figure it would accept toward qualifying income.

Third, left the remaining $700/month out of the file entirely rather than arguing for the full lease amount, keeping the file honestly sized to what could actually be relied on today.

The purchase funded insured at 35.8% GDS and 38.6% TDS, counting only the conservative $950/month rent figure, with the balance available to add back only once the LTB application actually resolved.

Both ratios sit comfortably inside CMHC's 39% GDS and 44% TDS maximums; the file was never close to either ceiling even on the reduced rent figure.

• 01A lease amount and a reliable rent figure are not always the same thing. An active Landlord and Tenant Board application against a unit's rent is a real risk to disclose, not a detail to omit.
• 02A T6 maintenance/abatement application is a different risk than an eviction notice or a rent increase not yet in effect. It can reduce a unit's rent, not just delay a landlord's plans for it.
• 03Get the lender's specific reduced-rent policy in writing rather than guessing at what portion of a contested lease amount will be counted.
• 04Size the file to what can be relied on today, not to the full lease amount. The rest becomes available once the dispute actually resolves, not before.