The Situation
The clients, a married couple in Metro Vancouver with two children of their own and two foster children in their care since 2019, were buying a much larger home for about $2 million and wanted the down payment out of the house they already owned, worth about $1.5 million with a mortgage of roughly $344,000.
The Challenge
On paper the household income looked modest: one client owns a consulting business grossing about half a million dollars but draws a T4 of about $50,000; the other has a salary of about $76,000 after a year off following a concussion. The largest income, about $150,000 a year of non-taxable foster-care payments, is one many lenders will not count at all.
The Solution
We refinanced the home with a major bank, a prime lender, at 80% of value: a mortgage of about $1.2 million on a three-year fixed term at about 6.4% in 2023, with a 30-year amortization, qualifying on the T4, 60% of the corporation's two-year average net income after tax, the salary, and the foster-care income, documented through the agency's annual agreement renewed every year since 2019. Both credit files were spotless at 764 and 807, and the ratios sat at 38% and 39%.
The Outcome
About $850,000 of equity released for the purchase, which, with a $200,000 family gift, became a 50% down payment on the new home (its own case study). Foster-care income is real, consistent and tax-free; the lenders that read it properly are the ones a family like this needs.