As a mortgage insurance innovator, Genworth Canada promotes underwriting flexibility to help our lender partners grow their business. Genworth Canada underwriting offers:
- No automated declines
- Timely call backs and underwriting availability
- Escalation process
- Exceptions and stretches are available for consideration
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Adjustable Rate Mortgage (ARM)
Both the interest rate and payment vary concurrently during the term subject to two options:
- Option A) The mortgage payment is adjusted to cover both principal and interest to maintain the amortization schedule when the interest rate increases; or
- Option B) The mortgage payment is adjusted to ensure the interest is paid when the interest rate increases until the term renewal at which point the payment is adjusted to maintain the amortization schedule.
Alimony Child Support
When accepting child support or alimony, the applicant must meet the following criteria:
- Court ordered or an executed separation agreement (lender must obtain)
- No more than 50 per cent should be used for qualification purposes
- 100 per cent may be used provided income represents < 30 per cent of gross income and borrower has demonstrated receipt - through T1General - for a minimum of 1 year.
- The lending value of the real estate is based on the residential dwelling and no more than 15 acres of land and exclude any outbuildings. The lending value is determined by using the lesser of either the purchase price or the appraised value.
An applicant with a prior bankruptcy will be considered for mortgage insurance, up to a maximum LTV ratio of 95 per cent, provided that the bankruptcy has been discharged for at least two years and they have at least two years of re-established good credit. Applicants having had a foreclosure or power of sale are not eligible for mortgage insurance.
Car allowance may be used to offset car loan/lease payments provided:
- Car allowance is a taxable benefit
- Applicant has been receiving car allowance for at least one year and it is likely to continue
Child Tax Credit/ Family Allowance
Child Tax Benefit/Family allowance income may be used for qualification purposes provided applicants meeting the following criteria:
- 100 per cent may be used for the applicant's children who are 18 years old and under
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
- Allowance cheque slip
- Bank statement showing automatic deposit
Child Care Benefit (UCCB)
Genworth Canada will accept the Universal Child Care Benefit (UCCB) as a form of income for qualification purposes. This benefit provides $100 per month per child for all children less than six years of age. No confirmation of the child's/children's age is required, but lenders must verify the UCCB income through one of the following:
- UCCB Statement
- Bank Statement showing automatic deposit of UCCB
- GRC62 Form (this is a statement provided by Revenue Canada)
- Genworth Canada allows conversion from a fixed rate mortgage to a variable rate mortgage at time of renewal, without an additional application fee or premium surcharge, provided that:
- the loan is in good standing and presently insured by Genworth
- the application is not a new application from a different lender
- the lender has confirmed that the LTV of the original lending value does not exceed the maximum LTV ratio of their variable rate product arrangements
- the lender has retained all underwriting documentation in their files
Traditional Down Payment
- Personal savings
- Non-repayable gift from immediate family member(s)*
- Sweat equity
- Equity from the sale of another property
- Existing home equity
*An immediate family member is defined as a father, mother, child, brother, sister, grandparent, or legal guardian.
Non-Traditional Down Payment
Borrowed sources at arm’s length to the purchase, such as:
- Personal loans
- Lines of Credit / Credit Cards
- Gifts from non-immediate family member(s)
Debt Service Coverage and Calculation
- The following GDSR and TDSR limits will apply to all loan-to-values across all products.
- Changes to Other Debt Obligation Inputs:
- For unsecured lines of credit and credit cards, a minimum monthly payment of 3% of the outstanding balance will be required for TDSR calculation purposes
- For secured lines of credit, a minimum monthly payment based on the balance being amortized over 25 years at the contract rate or 5 year benchmark rate will be required for TDSR calculation purposes.
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 six (including any of their own children)
- The applicants must live on site
- If foster care income accounts for more than 50 per cent of applicants' total income, we will require a minimum of 10 per cent down payment
- Maximum LTV is 95 per cent
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. Under the Borrowed Down Payment product, gifts are permitted from sources other than immediate family.
If the guarantor occupies the property, the income will be considered for qualification purposes provided the guarantor is a direct family member (mother, father, brother, sister, grandparent, child or legal guardian). If the guarantor does not reside in the property, Genworth Canada 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 a 5 per cent down payment using Genworth's New To Canada program. Applicants must have immigrated and/or relocated to Canada in the past 60 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 our New to Canada program overview for complete guidelines.
Income and Employment (Fixed and Variable)
For borrower income used for mortgage qualification, the lender must make reasonable effort to obtain relevant third party income and employment verification. The verification should support the borrower’s underlying income, history and employment status. Examples of verification may include the following:
Fixed Income (Salary, Long Term Benefits)
- History of salary deposits
- Letter of employment
- Recent pay stub
- Notice of Assessment
- T1 General accompanied by the corresponding Notice of Assessment
- RRIF Income
Variable Income (Bonus, Commission, Overtime, Seasonal Employment, etc.)
- Must have been received for a minimum of 2 years
- The lesser of the last year’s income or 2 year average income will be used for qualification purposes
- The most recent year’s income may be used provided there is a year over year increase for at least 4 years, subject to lender disclosure and reasonability of increases
100 per cent can be used if the last two years T5's confirm receipt. If some or all of the funds are liquidated for down payment, the income must be reduced accordingly.
Genworth Canada approved lenders can process a mortgage switch (where the mortgage is Genworth Canada insured) without obtaining approval from Genworth Canada, provided the outstanding mortgage balance and amortization schedule do not change. This includes switching in mortgages that were originally registered as a collateral charge
Multiple Genworth-insured Mortgages
Borrowers can obtain a maximum of four (4) insured mortgages, for four (4) different properties, up to a maximum total insured amount of $1.5 million.*
* Maximum one (1) Alt A policy is permitted per borrower. Rental income used for qualifying must be in accordance to our existing policy. (Refer to "Rental Income" in this section)
100 per cent may be used provided income represents less than 25 per cent of total income and borrower has demonstrated receipt for a two-year period.
Full return to work 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.
100 per cent of permanent part-time income will be considered based on guaranteed number of hours.
Up to 100 per cent of income from a second job will be considered if borrower can demonstrate a minimum two-year history supported by income tax assessments or T4's.
- The qualifying interest rate used to calculate the gross debt service ratio (GDSR) and total debt service ratio (TDSR) will be the greater of the contract rate or the 5-year benchmark rate.
- For multi-component mortgages, each component must be qualified using the applicable criteria above.
Owner-Occupied 2-Unit Properties:
- Greater than 80% LTV
- Genworth will accept 100% of the rental income across Canada subject to:
- Each applicant having minimum credit score of 680
- If the above credit cannot be met, 50% of rental income is to be used for qualification.
- Taxes and heat are to remain excluded from the debt service ratio calculation
- Total Debt Service Ratio (TDSR) Calculation:
Principal + Interest + 50% Condo Fees (if applicable) + Other Debts
Gross Annual Income + % of Gross Rents
- Less than or equal to 80% LTV (Owner Occupied 2-4 Units)
- A rental offset of 80% is permitted
- TDSR Calculation:
Principal + Interest + Other Debts â€“ (Rental Income x 80%)
Gross Annual Income
Owner-Occupied 3-4 Unit Properties (greater than 80% LTV) & Non-Owner Occupied Rental Properties:
- Lenders may use their existing policy to calculate net rental income. At a minimum, operating expenses must include mortgage interest, maintenance and vacancy
- Net rental income surplus may be added to the gross annual income
- Net rental income shortfall should be deducted from the applicant’s gross annual income
Rental Income Confirmation/Documentation (All LTV's and Products)
- For properties with existing rental units, the rental income may be confirmed using a two year average of current lease agreements OR
- Where rental income cannot be validated with lease agreements for a two year period, income for new or existing units is to be confirmed via fair market rent from an appraisal. Lenders should also apply a market vacancy rate in accordance with their internal policy.
100 per cent of Employment Insurance income for seasonal workers will be considered provided the lender has verified that the applicant has been employed for at least two-years, the income is regular, recurring and continuous and 70 per cent of the income comes from the salary paid by the company and no more than 30 per cent comes from the employment insurance. Income is calculated based on the lesser of the two-year average income or the last year's income. The income must be validated with income tax returns or notice of assessments.
Any individual who has ownership interest in a company and is paid based on company performance, or whose ownership interest is 25 per cent 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 two-year's financial statements or tax assessments. Genworth Canada permits lenders to gross-up the total income (line 150 Revenue Canada Notice of Assessment) by up to 15 per cent. Income gross-up is subject to lender guidelines. The lower of the average net income for the previous two years or the most recent year are to be used for qualification purposes.
- Self-Employed Stated Income
Self-employed borrowers that cannot provide traditional income verification can provide a stated income that is reasonable based on the length of operation, type and size of the applicant’s business. The reasonableness of the income should also reflect the applicant’s personal financial profile and be sufficient to qualify the mortgage within Genworth’s GDS/TDS guidelines. Stated income borrowers are also required to have a minimum documented self-employed tenure of two continuous years and meet minimum credit requirements. Please refer to our Genworth Canada Business For Self (Alt A) Program Overview for complete guidelines.
*Borrowers with commissioned income are ineligible under the “Business For Self (Alt-A) Program” and must meet the self-employed provable income requirements listed above.
Spousal Separation - Maximum Loan-to-Value (LTV)
In situations where two parties are on title to a property in the process of a legal separation where one party will keep the existing property, the following guidelines will now apply:
- Applications may be submitted as a purchase loan up to 95 per cent LTV
- The following criteria will apply:
- Both parties must be on title to the property prior to the legal separation
- The following documents confirming the sale price and transfer of title must be on file:
- Finalized separation agreement
- Offer to purchase
- Since this purchase transaction is non-arms length, a full internal appraisal is required
Treatment of Pension and disability non-taxable Income/Gross Income
For borrowers whose income is not taxed at the source, income may now be grossed-up on a two-tiered approach:
- Applicants with non-taxable income less than $30,000, are eligible to have their income grossed -up by 25 per cent
- Applicants with non-taxable income greater than $30,000, are eligible to have their income grossed-up by 35 per cent
In situations where there is disability income, the income may be temporary or permanent.
Treatment of US 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.
Trust agreement must be irrevocable and the statement must confirm the amount and frequency of payments.
Variable Rate Mortgages (VRM)
Variable interest rates are generally tied to the bank's prime lending rate and typically will fluctuate with prime. Genworth Canada allows the following variable rate products with no additional premium surcharge:
- Standard Variable Rate Mortgage (standard VRM)
- Capped Variable Rate Mortgage (capped VRM)
- Fluctuating interest rate with a constant payment during the term
- Standard VRM's may not be available on all Genworth Canada Programs. Please refer to specific Genworth Canada Product Overviews for eligibility
- For applicable standard VRM trigger points click here
A constant payment during the term that is set at the capped rate, with an interest rate that fluctuates, but only up to the capped rate.
For a non-capped VRM, the designated amount (trigger point) is 105 per cent of the original gross principal amount. If the loan amount exceeds the designated amount as described above, we offer the mortgagor the following options:
- Increase the amount of each regular payment under the mortgage in order to amortize the mortgage over the remaining amortization period
- Reduce the total amount of the loan amount then owing by making a lump sum payment to reduce the total amount to a point below the designated amount
- Convert the mortgage to a fixed rate mortgage with equal monthly payments
- For a capped VRM, the principal and interest payments are either calculated at the capped rate or at the contract rate (with the principal and interest payments being recalculated whenever the interest rate changes). This ensures the loan will amortize over the agreed term.
- If the event of default, the mortgage must be converted to a fixed rate mortgage. Once remedied, the VRM status can be re-instated.