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Answers to Commonly Asked Underwriting Questions

Answers to Commonly Asked Underwriting Questions

Alimony & Child Support
100% may be used provided income represents less than 30% of total income and borrower has demonstrated
receipt, through a T1 General, for a minimum of 1 year. Otherwise a maximum of 50% will be used.

Bankruptcy
An applicant with a prior bankruptcy will be considered for mortgage insurance, up to a maximum LTV ratio of
95%, provided that the bankruptcy has been discharged for at least 2 years and they have at least 2 years of
satisfactory re-established credit. Employment and income should be stable and debt ratios must be in line.
Previous bankrupt borrowers are ineligible for the following products; Cashback, Alt A, Vacation property and
Refinance applications. Borrowers who have had a bankruptcy in the last 7 years that resulted in a loss on debts
secured by real estate are ineligible for mortgage insurance.

Car Allowance
100% may be used to offset a car loan or lease payment provided that:
• the car allowance is a taxable benefit
• the applicant has been receiving the car allowance for a minimum of 1 year

Child Tax Benefit/Family Allowance
Income may be used for qualification purposes provided applicants meet the following criteria:
• 100% may be used for the applicant’s children who are 18 years old and under
• not permitted to be used for applicant’s children who are older than 18 years
The lender will be required to have verification of the child’s age and income stream in the file. Age and income
stream can be verified with the following documentation:
• Personal income tax returns
• Copy of birth certificate
• Government slip
• Bank statement showing automatic deposit

Foster Care Income
Income will be considered subject to the following requirements:
• The caregivers must have at least 2 years experience as foster parents
• Income letter or contract from the ministry and pay stub are the only acceptable forms of proof of income
• Letter from Social Services confirming tenure and current status
• Maximum number of children should not exceed 6 (including any of their own children)
• The applicants must live on site
• If foster care income accounts for more than 50% of applicants’ total income, we will require a minimum of
10% down payment
• Maximum LTV is 95%

Gifted Down Payments
Gifted down payments from immediate family members can be used provided they are properly verified, are
non-repayable and all other characteristics of the borrower are acceptable. Gifted down payments are not
required to be on deposit until time of closing.

Guarantor Income
If the guarantor occupies the property, the income will be considered for qualification purposes provided the
guarantor is a direct family member. If the guarantor does not reside in the property, Genworth will consider
income for the GDS/TDS calculation provided the guarantor is a direct family member and resides in the region
where the property is located.

Immigrants to Canada
Qualified homebuyers who have immigrated to Canada, or have been transferred to Canada by an employer can
qualify for a mortgage with as little as 5% down payment using Genworth’s New To Canada program. Applicants
must have immigrated and/or relocated to Canada in the past 36 months, be employed for a minimum of 3 months
in Canada, have a valid work visa or obtained landed immigrant status as minimum qualifications for the program.
Please refer to the New To Canada Program Overview at www.genworth.ca for complete details.

Parental Leave
Full salary is acceptable for qualification purposes. A letter from the employer is required indicating the position
the person is returning to, the return date, and the salary/income upon return.

Part time
100% of permanent part-time income will be considered. Up to 100% of a second job income will be considered
if borrower can demonstrate a minimum 2-year history supported by income tax assessments or T4’s.

Overtime
100% may be used provided income represents less than 25% of total income and borrower has demonstrated
receipt for a 2-year period.

Qualifying Rates
The qualifying interest rate used to calculate the gross debt service ratio (GDSR) and total debt service ratio
(TDSR) will be determined as follows:
• For loans with a fixed rate term of five years or more, the qualifying interest rate will be:
• the contract rate
• For loans with a fixed rate term of less than five years and for all variable rate mortgages, the qualifying
interest rate is the greater of:
• the contract rate, or
• the benchmark rate*
• For multi-component mortgages, each component must be qualified using the applicable criteria above.
* The benchmark rate (5-yr conventional mortgage rate) is published weekly by the Bank of Canada in series
V121764 and can be found via the following link: http://www.bank-banque-canada.ca/en/rates/interest-look.html

Rental Income
For owner-occupied 2-4 unit properties, 50%* of the gross rental income from the subject property may be
included in the borrower’s gross annual income.
TDSR: Principal + Interest + Other Obligations
Gross Annual Income + 50% of Gross Rents*
* For 2-unit properties in Victoria and Vancouver CMA’s, 100% of the gross rental income may be included in the
borrower’s gross annual income.

Seasonal Workers
100% of Employment Insurance income for seasonal workers will be considered provided the lender has verified
that the applicant has been employed for at least 3 years, the income is regular, recurring and continuous
and 70% of the income comes from the salary paid by the company and no more than 30% comes from the
employment insurance. Income is calculated based on the lesser of the 3-year average income or the last
year’s income. The income must be validated with income tax returns or notice of assessments.

Self Employment
Any individual who has ownership interest in a company and is paid based on company performance, or whose
ownership interest is 25% or greater, is considered to be self-employed. Commissioned borrowers and other
owner/operator situations, such as taxi drivers and truck drivers are also considered self-employed.

Self-Employed/Provable Income
Income must be verified by 2-year’s financial statements or tax assessments. Genworth permits lenders to
gross-up the total income (line 150 Revenue Canada Notice of Assessment) by up to 15%. Income gross-up is
subject to lender guidelines. The lower of the average net income for the previous 2 years or the most recent
year are to be used for qualification purposes.

Self- Employed Stated Income
Self-employed borrowers and commissioned sales people who cannot provide traditional income verification
may qualify for a low down payment mortgage for purchase or refinance through Genworth’s Business For
Self (Alt A.) Program. This program recommends a minimum documented self-employed tenure of 2 continuous
years and minimum credit requirements apply. Please refer to our Genworth Business For Self (Alt A) Program
Overview for complete guidelines at www.genworth.ca

Treatment of Pension and Disability Non-Taxable Income/Gross Income
For borrowers whose income is not taxed at the source, income may be grossed-up on a two-tiered approach:
• Applicants with non-taxable income less than $30,000, are eligible to gross-up their income by 25%
• Applicants with non-taxable income greater than $30,000, are eligible to gross-up their income by 35%

Treatment of U.S.Income
U.S. income will be considered at the current conversion rate. This applies to borrowers living in Canada and
paid in U.S. funds.

Source: MyMortgage.ca news letter
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