The income the first lender forgot to ask about

The first lender's intake process ran the file on salary alone — not because support income is unacceptable, but because nobody on that submission ever asked about it. Court-ordered and agreement-based support is real, documentable income at most lenders, but each one sets its own bar for how it's counted and how much history it wants to see before it will.

The decline read like a hard no on the refinance itself. It was actually a decline of an incomplete file — one that never presented $2,050 a month of real qualifying income the borrower has received reliably since the separation agreement was signed.

This is an uninsured refinance, so the ratios run against the minimum qualifying rate — the greater of contract + 2% or 5.25% — the same test that applies to a purchase.

The $520 gap between the qualifying payment ($3,065) and the contract payment ($2,545) is the stress test at work — it decides what the file has to prove, not what she pays each month. At $3,065, the qualifying payment itself tracks close to the average mortgage payment in Canada — this was never an oversized file, just an undocumented one.

GDS / TDS with support income counted

Both ratios clear the standard 39%/44% benchmark comfortably once the support income the first submission never presented is actually counted.

An FSRA-licensed Ontario mortgage agent identified the gap in the first submission and rebuilt the file around the income that was always there.

First, confirmed the support was real and ongoing. The executed separation agreement set out both the child and spousal support obligations in writing, removing any question about whether the payments were discretionary.

Second, documented the payment history. How many months of deposits a given lender wants to see before counting support income is that lender's own policy — illustrative, not a published rule — but six months of clean, on-time deposits matching the agreement is a commonly accepted bar.

Third, structured the payout on title. The $90,000 equalization payment to the departing spouse was registered and released as part of the refinance closing, consistent with the separation agreement.

Approved and funded: refinance at 62% LTV, uninsured, with the equalization payout released to the departing spouse on closing. Because this is a refinance rather than a sale, and because transfers between spouses made under a separation agreement are generally treated differently from an ordinary sale, no land transfer tax applied to this transaction — that stays a qualitative point here rather than a dollar figure, since it simply doesn't arise on this kind of file.

The home stayed with the parent raising the children, on a single income that, properly presented, was never actually short.

• 01Court-ordered or agreement-based support is real, usable qualifying income. How many months of deposit history a lender wants to see before counting it is that lender's own policy, not a regulator's rule.
• 02A first decline is sometimes just an incomplete submission. This file's original lender never asked about support income at all — confirm every income source was actually presented before treating any decline as final.
• 03Refinance ratios run at the qualifying rate, exactly like a purchase. The $520-a-month gap between the qualifying payment and the contract payment here is what a support-blind submission missed entirely.
• 04Ontario doesn't apply land transfer tax to a straight refinance, and generally treats transfers between spouses under a separation agreement differently from an ordinary sale. Keep this qualitative in a closing disclosure rather than quoting a figure that doesn't apply.
• 05An equalization payout changes the math twice — once on the mortgage balance being refinanced, once on which income sources now need to be proven going forward. Build both into the file from the start.