Case Study 9

Here is a scenario where a seasonal landscaper/snow removal applicant qualified for a $450K home using self-employed income. The applicant is is a seasonal worker. They earned $60K as a snow remover from November-February and $50K as a landscaper from March-September. With a Beacon score of 560, the applicant is looking to purchase a new home. His broker provided the following documents to qualify the $83K BFS income: Documentation Provided: 12 months business bank statements* 3 recent contracts/invoices for landscaping 3 recent contracts/invoices for snow removal Copy of business licence Statutory declaration from the lawyer showing no taxes owing HST/GST number *12 months of statements showed income that allowed us to offer a better rate than just using 6 months for self employed mortgage A) Gross Revenue Annualized Bank Statements $110K B) Annual Expenses Salaries and Wages (minus client's own salary/drawings) $0 Lease for office/store space (if applicable) $0 Other Annual Expenses: Cost of goods/materials $26K Phone $1K Total Annual Expenses $27K C) Qualifying Income (A - B) = C $83K Deal Rationale: The client's GDS/TDS was 35/35% with stressed debt service ratio of 42%. The client qualified for a 1 year mortgage to purchase a detached home in a great neighbourhood where all comparable homes were 10 days on market or less.

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