The client
A Brandon, Manitoba applicant buying a duplex plans to occupy one unit; the second unit sat vacant at closing after the previous tenant moved out before the sale, leaving no lease for the lender to look at — a different problem from a rental property file with an under-market lease already in force.
Purchase price
$305,000
Brandon duplex
Applicant's own income
$5,800/month
Before any rental income
Second unit status
Vacant at closing
Previous tenant moved out before the sale
Other debt
Car loan $290/mo
Unchanged through the purchase
The problem
With no lease and no current tenant, there was no rent roll for the lender to add back or offset against — and neither a stale lease from a tenant who was already gone, nor the buyer's own guess at what the unit might rent for, would stand in for one. A rental figure a lender can rely on has to come from somewhere more reliable than either.
What doesn't work for a vacant unit
- ▸The previous tenant's old lease is void the moment they move out -- it can't be used going forward
- ▸The buyer's own estimate of achievable rent isn't independently verifiable
- ▸A rent figure from comparable listings the buyer found isn't the same as a professional opinion tied to the specific property
Without any rental income counted, qualifying income was $5,800/mo alone — not enough headroom for the file the applicant actually needed.
The numbers
The fix is the appraisal itself, not a substitute document.
| Qualifying income, before and after the appraiser's opinion | Amount |
|---|---|
| Applicant's own income | $5,800/month |
| Appraiser's opinion of market rent | $1,150/month |
| Add-back (50% of market rent) | +$575 |
| Qualifying income, on the appraiser's opinion | $6,375/month |
| Total debt service | Vacant, no rent counted | With the appraiser's opinion |
|---|---|---|
| Qualifying mortgage payment | $2,074 | $2,074 |
| Property tax and heat | $395 | $395 |
| Rental income counted | $0 | $575 (50% add-back) |
| Total debt service | 47.6% | 43.3% |
47.6% would have failed CMHC's 44% maximum outright on the applicant's own income alone. Add-back, net-income and offset treatments only ever apply once there's a rent figure to apply them to.
The solution
A mortgage broker in Manitoba treated the vacancy as an appraisal question, not a documentation gap to paper over.
First, ruled out the previous tenant's old lease and the buyer's own estimate. Neither one gives a lender something independently reliable to underwrite against.
Second, had the appraiser complete a market-rent opinion as part of the appraisal itself. Based on comparable rented units in the immediate area, not the departed tenant's old rent or a listing the buyer happened to find.
Third, presented the appraiser's figure to the lender for the standard add-back treatment. An appraiser's own opinion, tied to the specific property, was something the file could actually rely on.
The outcome
The purchase funded insured at 4.80% on the appraiser-supported $6,375/mo qualifying income, GDS at 38.7% and TDS at 43.3%, both comfortably inside CMHC's maximums.
What to take from this file
- 01A vacant unit with no lease needs an appraiser's own opinion of market rent. Not the previous tenant's old lease, and not the buyer's own estimate.
- 02A departed tenant's lease is void the moment they move out. It cannot be used to qualify a file going forward.
- 03An appraiser's market-rent opinion, based on comparable rented units, is something a lender can rely on in a way a buyer's own research isn't.
- 04Add-back and offset treatments for rental income only apply once there's a reliable rent figure to apply them to. Solve that first.
- 05A vacant-at-closing rental unit isn't a defect in the file. It's a documentation gap with a specific, standard fix.
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:
- ▸4.80% contract rate — rates move daily; not a quote.
- ▸the 50% rental-income add-back — each lender sets its own add-back or offset treatment for rental income.
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.