The client
A farm owner near Saint-Hyacinthe had Year 1 T1 net farm income of $70,800 ($5,900/month) and Year 2 of $84,000 ($7,000/month), buying a $385,000 property at 20% down.
Year 1 T1 net farm income
$70,800/year
$5,900/month
Year 2 T1 net farm income
$84,000/year
$7,000/month, includes a $9,600 ASRA payment
Purchase price
$385,000, Saint-Hyacinthe
20% down, conventional
Other debt
$255/mo car loan
The problem
Quebec farms can draw on two separate income-stabilization programs at once: federal AgriStability, and La Financière agricole du Québec's own provincial ASRA (Assurance stabilisation des revenus agricoles) program -- two distinct administrators, two distinct payments, for two different aspects of farm income support.
What the underwriter assumed
- ▸Year 2's T1 income included a $9,600 ASRA payment from La Financière agricole du Québec, on top of a separate federal AgriStability payment
- ▸Unfamiliar with Quebec's own parallel provincial program, the underwriter assumed ASRA was simply AgriStability under another name
- ▸Stripped the $800/month ASRA amount out of qualifying income entirely, treating it as a duplicate that had already been counted once
Nothing had actually been double-counted. The underwriter had simply never seen a Quebec farm file with both programs on it before.
The numbers
Once both programs were recognized as distinct, re-averaging the two years' T1 income with both payments correctly included was ordinary arithmetic.
| Two-year averaging, with and without the ASRA payment | Amount |
|---|---|
| Base mortgage (80% of purchase price) | $308,000 |
| Qualifying payment (7.00%, 25 years) | $2,157/mo |
| Total debt service | ASRA wrongly stripped out | Both programs correctly counted |
|---|---|---|
| Year 1 monthly income | $5,900 | $5,900 |
| Year 2 monthly income | $6,200 | $7,000 |
| Two-year average qualifying income | $6,050 | $6,450 |
| Total debt service, + $255 car loan | 46.7% | 43.8% |
46.7% is high enough to sink this file at most lenders; correcting the average to $6,450/month brings total debt service down to 43.8%, back in comfortable range -- exactly the kind of averaging error a self-employed two-year average can produce when one year's own support payments are misread.
The solution
A courtier hypothécaire licensed under Quebec's Act respecting the distribution of financial products and services treated the two programs as the distinct sources they actually are, rather than accepting the underwriter's assumption.
First, obtained a program statement directly from Agriculture and Agri-Food Canada confirming the AgriStability payment received, separate and apart from any provincial support.
Second, obtained a separate statement from La Financière agricole du Québec confirming the ASRA payment, with both statements showing distinct program names, payment dates and amounts.
Third, re-averaged the two years' T1 income with both payments correctly included, and asked the underwriter to requalify the file on the corrected qualifying income figure.
The outcome
The purchase funded at 5.00%, with total debt service of 43.8% once both years' T1 income, including both program payments, was correctly averaged.
This is a conventional, uninsured purchase at 20% down; the 46.7% and 43.8% figures are informational, showing exactly what the correction itself changed.
What to take from this file
- 01AgriStability and ASRA are two distinct programs, run by two different governments, for two different purposes. A Quebec farm can legitimately receive both in the same year without any overlap.
- 02An underwriter unfamiliar with a provincial program can mistake it for a duplicate of a federal one. A separate program statement from each administrator resolves the question directly.
- 03A two-year income average is only as reliable as the income going into each year. Confirm every support payment is correctly attributed before accepting the average a lender's system produces.
- 04This kind of error can be large enough to sink a file that was never actually a problem. Correcting one misread payment moved this file from 46.7% to a comfortable 43.8%.
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:
- ▸5.00% contract rate — rates move daily; not a quote.
- ▸the lender's initial assumption that ASRA duplicates AgriStability — this reflects one underwriter's own unfamiliarity with Quebec's provincial program; it is not a published policy of excluding ASRA.
- ▸the TDS figures — this is a conventional, uninsured purchase at 20% down -- there is no CMHC ratio ceiling; the numbers are 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.