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A New Look at Alternative Mortgages for Self-Employed and Investor Clients | ⑤ The Broker Briefing

Equitable Bank (EQ Bank) provides mortgage solutions that look beyond traditional T1/NOA income verification, using stated income based on cash flow to approve self-employed clients. The bank also empowers real estate investors by using up to 95% of rental income for qualification and offers the TotalWORTH Mortgage for high-net-worth individuals. These flexible programs, including solutions for bruised credit and the ability to finance up to 10 rental units, give brokers more options for complex client files.

THE BROKER BRIEFING

9/5/20255 min read

A New Look at Alternative Mortgages for Self-Employed and Investor Clients

As mortgage brokers, we know that not every client fits neatly into the A-lender box. Whether it's a self-employed professional, a real estate investor, or someone rebuilding their credit, finding the right solution is key to a successful career. We recently had an informative session with Alik Manoyan from EQ Bank | Equitable Bank and came away with some fantastic insights into their products and how they empower us to help more clients.

More Ways to Qualify Self-Employed Clients

Equitable Bank has made a name for itself as a go-to for business-for-self (BFS) clients. They've developed a flexible approach that looks beyond traditional income verification, a major win for entrepreneurs and freelancers. The key is their willingness to consider a wider range of income sources and client situations.

Why this matters:

Most traditional lenders rely on T1 Generals and Notice of Assessments, which can show constricting income history, often reducing loan amounts (depending on how much business owners write off legitimate expenses). Equitable’s stated income policy, which uses 12-months bank statement history, allows clients to qualify based on their true income and financial viability, not just their taxable income.

Note: Many lenders do have their own stated income policies to help self-employed borrowers. There are differences with each one, so be sure to review lenders’ specific guidelines.

How they do it:

  • Income Sources: They accept various forms of income proof, including bank statements, business financials, and commission letters.

  • Situations Considered: They can accommodate registered and non-registered businesses, new immigrants with limited credit history, and even those with large loans or a desire for a 30-year amortization.

  • The "Hack": For sole proprietors, they offer a few different methods for calculating qualifying income. This includes a 2-year average of Gross Profit (minus specific expenses like rent and salaries) or a 2-year average of Net Income with a 20% Gross Up. This flexibility can be the difference between an approval and a rejection.

Example Scenario:

A freelance graphic designer has been in business for three years and has a solid income. However, they've diligently written off all their business expenses, so their net income on paper is too low for a traditional mortgage. Equitable Bank's solutions allow us to use their bank statements to demonstrate their actual cash flow, making mortgage approval more of a possibility.

Empowering Real Estate Investors

For real estate investors, Equitable Bank offers a competitive set of solutions designed to help them expand their portfolios. They've updated their policies to make rental properties more accessible.

Why this matters:

A-lenders often have a more conservative view on rental income, limiting how much can be used to qualify for a new mortgage. Equitable’s policy to use up to 95% of rental income significantly increases an investor's borrowing power, enabling them to grow their portfolio faster.

How they do it:

  • Expanded Rental Income: They can now add back 95% of the rental income on subject rentals and offset 95% of the rental income on non-subject rentals.

  • Portfolio Growth: Investors can hold up to 10 rental units in their portfolio and mortgages can be registered under a company name with a personal guarantee.

  • Fair Market Rents: They require fair market rents on each appraisal, and will use this metric if a lease is not available.

Example Scenario:

An investor wants to buy a four-plex but their personal income isn't high enough to qualify on its own. With Equitable, we can use 95% of the projected rental income from the new property, as well as 95% of the income from their existing rental properties, to qualify them for a new mortgage. This makes a seemingly impossible deal a reality.

Solutions for Imperfect Credit

Equitable Bank also offers a pathway to homeownership for clients with bruised credit. They focus on the client's story and their ability to rebuild, rather than just a credit score.

Why this matters:

Life happens. A recent illness, divorce, or job loss can temporarily impact a client's credit score. By looking beyond the number and considering unique circumstances, Equitable gives us the ability to help deserving clients get back on their feet and into a home.

How they do it:

  • Credit Flexibility: They will consider clients with Beacon Scores below 550.

  • Unique Circumstances: The lender takes into account unique personal circumstances such as divorce, illness, or a job loss.

  • Discharged Bankruptcies: They will consider files where a client has been discharged from bankruptcy. However, if a property was included in a double bankruptcy, it would not be considered. They can also process refinances to pay off consumer proposals.

Example Scenario:

A client had a job loss two years ago and fell behind on some credit card payments, dropping their Beacon score below 550. Since then, they've found stable employment and have been making all their payments on time. A traditional lender might reject them outright, but Equitable Bank would look at the full picture, see their recent payment history, and consider providing a mortgage solution.

More Innovative Products for Every Client

Beyond these specific situations, Equitable Bank also offers a range of innovative products to fit different client needs.

TotalWORTH Mortgage: This is their most flexible product, designed for high-net-worth individuals. It can be used for purchases or refinances on owner-occupied properties with up to an 80% LTV. A key strategy here is to ask clients for their investment statements and day-to-day bank statements, as having a portion of the mortgage amount in liquid assets can be a major factor in getting approved.

Why this matters:

Some high-net-worth clients have significant assets but their income may fluctuate or be non-traditional. This program allows us to leverage their liquid assets to meet down payment requirements and qualify them for a mortgage, even if their income ratios are on the higher side.

Example Scenario:

A retired professional has significant assets in investments and savings but a limited income. The TotalWORTH Mortgage allows us to use a portion of their liquid assets to help them qualify for a mortgage on a new owner-occupied property, even with a GDS/TDS of up to 80%.

Two bonus products we touched on:

HELOC: They offer a Combo mortgage with a Home Equity Line of Credit (HELOC), which can be offered as a standalone product or with an Equitable Bank mortgage. It offers a max 80% LTV and interest-only payments.

Adjustable-Rate Mortgages: For clients who want flexible rates, Equitable Bank has adjustable-rate mortgages available for new originations and renewals.

All in All

What ties all of these solutions together is Equitable Bank’s dedication to making the process as smooth as possible for brokers. Their online broker portal provides a deal dashboard, specific document requests, and a chat feature for real-time support. They'll even confirm income before ordering an appraisal to save everyone time and money.

Have you used any of these products, or similar ones, for a tricky file lately? What alternative lending solutions have made a big difference for you and your clients? Drop your experience in the comments — the more strategies we share, the more clients we can help.

Thanks again to Alik Manoyan for taking the time to speak with our team, and answer our very detailed and very specific questions — you rock. Always good to hear your voice and all the latest happenings and offerings at EQ Bank | Equitable Bank.

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