Case Study · Residential / Prime

A Self-Employed Farrier's Lower Latest Year: A Major Bank's Insured Mortgage Bought a First Townhouse at About 94% in Abbotsford

A married couple with two children, first-time buyers, were buying a three-bedroom, three-bathroom Abbotsford townhouse to live in, valued at about $650,000.

Closed in 2024 · Published October 18, 2026

Residential
Prime lender
Insured
Purchase
First-time buyer
Self-employed

Value: about $650,000
Insured mortgage: about $610,000 plus a premium of about $24,000
Loan-to-value: about 94%
Income used: two-year average, grossed up 15% to about $89,000
Rate in 2024: 4.79%, three-year fixed, 25-year amortization

The Situation

A married couple with two children, first-time buyers, were buying a three-bedroom, three-bathroom Abbotsford townhouse to live in, valued at about $650,000.

The Challenge

One spouse, a farrier self-employed since 2012, netted about $92,000 in 2021 but about $62,000 in 2022, so the two-year average needed an exception, and that spouse's score was 632 after high card balances and late phone bills.

The Solution

In 2024 we placed an insured mortgage of about $610,000 plus a premium of about $24,000 with a major Canadian bank, about 94% of the value, on a three-year fixed term at 4.79% with a 25-year amortization, qualified at 6.79%. The two-year average, grossed up 15% to about $89,000, was accepted after we showed that 2023 gross income of about $160,000 topped both earlier years. A salary of about $55,000, the child benefit and an 825 score carried ratios of about 38% and 44%.

The Outcome

The family own their first home, with the down payment, about 6% or about $40,000, a family gift.

Run the numbers

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This first townhouse was an insured purchase with a gifted down payment. See the insurance premium on your own price and down payment.

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Step 1 · Your purchase

Insurance program

Borrowed down payment (Flex 95) — borrowing your 5% down payment from a line of credit or loan is allowed with strong credit. It raises the 5%-down premium from 4.00% to 4.50% (the loan payment counts in your debt ratios). Only affects purchases with less than 10% down.

Purchase price

Buying new construction? Enter the price including the 5% GST — insurers calculate the premium on the GST-inclusive price. Insured mortgages cap at $1,499,999 (20% down required at $1.5M+).

Down payment

10% = $90,000

Amortization

Province

PST on the insurance premium is paid at closing in ON (8%), QC (9%) and SK (6%). Other provinces: none.

Insurance premium

$25,110

3.10% of $810,000 loan @ 90.0% LTV

Breakdown

Purchase price$900,000

Down payment$90,000 · 10.0%

Loan before insurance$810,000

Insurance premium (3.10%)$25,110

Total insured mortgage$835,110

Premium can be added to (financed in) the mortgage. PST on the premium, where applicable, is paid in cash at closing.

Premium curve · 8% → 25% down

Watch how the insurance premium drops as you raise your down payment — it hits $0 once you reach 20% (no insurance needed). The curve starts at this home's federal minimum down payment. The marker shows where you are right now.

What this calculator does that most don't

Charges the provincial sales tax on the premium where it applies (ON 8%, QC 9%, SK 6% — Manitoba removed its in 2020) — due in cash at closing, which most calculators quietly omit
Standard insured AND Sagen Insured Stated Income (self-employed) in one tool — switch the program to see the higher stated-income premium
Knows the December 2024 rules: max insured price $1,499,999 (high-ratio, under 20% down — not to be confused with the $999,999 insurable cap) and the first-time-buyer OR new-build gate on 30-year insured amortization, with the 0.20% surcharge applied

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Questions and answers

Questions about this file

Can a self-employed borrower qualify when the latest year is lower?+

Yes, with an exception. In this 2024 file a farrier self-employed since 2012 netted about $92,000 in 2021 but about $62,000 in 2022, and a major Canadian bank accepted the two-year average, grossed up 15% to about $89,000.

Why did the bank accept the two-year average?+

Because the next year was stronger. In this 2024 file we showed that 2023 gross income of about $160,000 topped both earlier years.

Can you get an insured mortgage with a 632 score?+

This family did. In this 2024 file one spouse's score was 632 after high card balances and late phone bills, and a salary of about $55,000, the child benefit and an 825 score carried ratios of about 38% and 44%.

Can the whole down payment be a gift?+

In this file it was. In this 2024 file the down payment, about 6% or about $40,000, was a family gift.

What rate and term did the family get?+

4.79% on a three-year fixed term. In this 2024 file the insured mortgage of about $610,000 plus a premium of about $24,000 had a 25-year amortization and was qualified at 6.79%.

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