The client
A retired landlord in Orillia refinanced a $245,000 wholly-rental duplex, one unit rented at $1,650/mo to a tenant with a disability, the other at $1,450/mo unaffected throughout.
Refinance balance
$245,000
22 years remaining
Unit A rent
$1,650/mo
Tenant with a disability accommodation
Unit B rent
$1,450/mo
Unaffected throughout
Landlord's own income
$3,200/month
CPP, OAS and a small pension
The problem
A tenant's lease was recently amended to add a live-in caregiver as a documented disability accommodation -- the caregiver is not a tenant, pays no rent, and changes nothing about the unit's permitted use or the rent actually owed.
What the refinance underwriter misread
- ▸Saw an amended lease adding a second adult occupant to the unit
- ▸Flagged the property as looking like an unauthorized rooming arrangement, the kind its underwriting guidelines exist to catch
- ▸Never distinguished a disability-accommodation occupant, who pays no rent and holds no tenancy, from an undisclosed second tenant
Nothing about the lease's rent, the unit's use, or the property's own income had changed. Only the number of people the tenant was lawfully entitled to have living with them had.
The numbers
The refinance's own math was never in doubt once the accommodation was correctly separated from a genuine occupancy concern.
| Qualifying on the same rent roll, unaffected by the accommodation | Amount |
|---|---|
| Unit A rent | $1,650/mo |
| Unit B rent | $1,450/mo |
| Combined gross rent | $3,100/mo |
| Total debt service | Figure |
|---|---|
| Payment at the qualifying rate (6.85%), 22 years | $1,784/mo |
| Property tax | $310/mo |
| Heat | $125/mo |
| Rent offset (80% of $3,100/mo), added to income | +$2,480/mo |
| Total debt service | 39.1% |
39.1% is entirely unaffected by who else lawfully lives in Unit A -- the rent roll, the offset convention, and the landlord's own personal income are exactly what they were before the accommodation was added to the lease, consistent with how rental vacancy data treats a stable, long-tenured unit.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the amended lease as exactly what it documented -- an accommodation, not an occupancy violation.
First, obtained the tenant's own written confirmation of the accommodation, describing the caregiver's role and confirming the caregiver holds no tenancy and pays no portion of the rent.
Second, confirmed the lease's rent and term were entirely unchanged -- the amendment added an occupant, not a second tenant, and created no new tenancy interest in the unit.
Third, confirmed directly with the lender that an accommodation-related occupant does not trigger its own rooming-house or undisclosed-occupancy underwriting concern -- a distinction covered in general rental-property underwriting guidance, which is written for a genuinely different situation -- unrelated adults sharing a unit as independent tenants.
The outcome
The refinance funded at 4.85%, with total debt service at 39.1% on the same rent roll the property has carried all along.
Because this refinance is uninsured, CMHC's ratio maximums do not apply directly; the figure shown is informational.
What to take from this file
- 01A disability accommodation added to a lease is not a second tenancy. A live-in caregiver who pays no rent and holds no tenancy interest does not change the unit's use or its qualifying rent.
- 02A lender's rooming-house or undisclosed-occupancy policy is written for a different situation. Confirm what it is actually meant to catch before assuming it applies here.
- 03Get the accommodation documented in writing, from the tenant. A short written confirmation answers an underwriter's question far faster than a dispute over the lease's meaning.
- 04The disability at issue can belong to a tenant, not just to the borrower's own household. A landlord's file can turn on exactly the same accommodation principle either way.
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:
- ▸4.85% contract rate — rates move daily; not a quote.
- ▸the 80% rent-offset convention — each lender publishes its own treatment for crediting rental income; there is no universal percentage.
- ▸the TDS figure — this file is uninsured, so there is no CMHC ratio ceiling -- the number is informational.
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.