More Ways to Get Approved: Exploring Mortgage Options with an Alternative Lender

When clients don’t fit the traditional mortgage mold, brokers need flexible solutions that still make financial sense — for both the client and the lender. That’s why we connected with Philip Beer at Community Trust — an alternative lender we work with to help borrowers who fall just outside prime lending criteria.

We took a deep dive into their lending programs, recent updates, and smart strategies for qualifying self-employed borrowers. From high-equity homeowners to clients navigating credit recovery or non-traditional income, Community Trust offers tools that can help brokers expand what’s possible.

Here’s what we learned — and how it might help you support more clients.

A Quick Guide to Prime, Alternative, and Private Lending

Before we dive into the specifics, it's helpful to understand the different types of lenders. So, in case you're new to the mortgage lending world, here's the breakdown:

Prime Lenders (A Lenders): Think major banks and similar institutions. They offer the lowest interest rates and best terms but have strict qualification criteria. Clients need to fit a specific, "insurable" box. Our article with MERIX Financial is an example of a prime lender.

Alternative Lenders (Alt A or B Lenders): They offer more flexibility than prime lenders, with slightly higher interest rates and occasional fees (which can sometimes be waived if you're close to prime qualifications). Terms are generally good, though location in a "marketable" area is often key. Community Trust falls into this category.

Private Lenders: These lenders are for short-term solutions, complex scenarios or urgent needs. Great for borrowers with unusual income structures, recent credit issues, or renovation needs — but come with higher rates and stricter repayment timelines. Our first article with Keystone MIC is an example of private lending.

Three Flexible Lending Programs Tailored to Unique Borrowers

Community Trust recognizes that borrowers come with a range of financial stories, assets, and needs, which is why they’ve developed lending programs designed to address specific client profiles. Here’s a closer look at three programs that can help brokers match clients to solutions that work for them.

1. High Equity Program

This is for borrowers who have significant equity but may not qualify for prime lending due to credit or income.

• Maximum 65% Loan-to-Value (purchase or refinance)

• Minimum FICO score (similar to credit score) of 600

• Clean credit profile for the last three years

• Max debt service ratios of 60/60

• Owner-occupied only in marketable areas

• No Rate Premiums

Example scenarios: Clients with generational housing setups, recent credit recovery, or non-traditional profiles who can put 35% or more down.

2. High Credit Program

Designed for borrowers with strong credit who fall short in other areas.

• Up to 80% Loan-to-Value for purchases (75% for refinances)

• Minimum FICO score of 680

• No current debts in arrears greater that R1 (revolving credit) / I1 (installment credit), no judgements or collections, and no mortgage arrears in the last 24 months

• Max debt service ratios of 60/60

• Not permitted on rental properties

• Slight rate premium (about 30 basis points)

Example scenarios: Self-employed professionals, clients mid-divorce, or those in job transitions who still show solid financial responsibility.

3. High Net Worth Program

Tailored for clients who may not have a typical income stream — such as retirees, entrepreneurs, or newcomers to Canada with global assets.

• Max 75% Loan-To-Value

• Minimum 680 credit score

• Clean credit profile for the last three years

• No current debts in arrears greater that R1 (revolving credit) / I1 (installment credit), and no mortgage arrears in the last 24 month

• No gifted funds or rental properties allowed

• Rate premium (about 50 basis points)

Example scenario: Buyers relocating to Atlantic Canada who have substantial assets but limited Canadian income documentation.

Smarter Income Qualification Strategies for Self-Employed Borrowers

One standout takeaway from our session was how Community Trust approaches income qualification for self-employed borrowers:

A Quick Glance:

• Use a 2 year average of gross profit from Section 4A of the T1 (not just net income)

• Deduct only a few key business expenses: rent, wages, and fuel to determine “qualified income”

Other accepted methods:

• 2 year net income average, grossed up by 20%

• 12-month business bank statement review

• For corporations: Financial statements + salary + add-backs

The Detailed Glance:

For sole proprietors, they look at a 2 year average of Gross Profit from Section 4A of your T1 Statement of Business Activities. The "hack" involves strategically deducting only rent, property tax, salaries, wages, and fuel costs (for transportation businesses) from this gross profit to arrive at "Qualified Income." This provides a more favourable income assessment compared to traditional methods.

Alternatively, they can use a 2 year average of Net Income with a 20% Gross Up (not exceeding gross income) or a 12-month bank statement approach. For incorporated businesses, they consider 2 years of financial statements, using the lower of the two years' "Net Income before Taxes" and adding back amortization, depreciation, and salary paid to themselves.

Bonus: For self-employed clients, providing an accountant's letter or 12 months of bank statements can even lead to a 15 basis point rate reduction!

Recent Updates You Should Know About

Community Trust continues to adjust its programs to meet real-world client needs. A few recent changes include:

Removing Cosigned Debts and Mortgages: With 3 months of bank statements showing the co-signer hasn't made payments, these can be removed from your client's debt load after 6 months of the other party making consistent payments, freeing up borrowing capacity for their own needs.

Flexible Income for Non-Guaranteed Hours: They can now consider projected income for individuals with non-guaranteed part-time hours or those with recent gaps in employment (e.g., due to parental leave).

Final Thoughts: Expanding What’s Possible for More Clients

Whether you’re supporting someone who’s self-employed, building back their credit, carrying significant equity, or navigating a non-traditional income path, these programs give you more options for your clients. Thanks again to Philip Beer at Community Trust for taking the time to chat with our team!

Do you often work with clients who have non-conforming income, or are self-employed?

If you have a scenario you’re curious about, or just want to compare notes — drop a comment or send us a message. Expanding our toolkit starts with the right conversations, and we’d love to keep the conversation going.

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