Jessica, a mortgage agent in Toronto, has a client who is self-employed as a graphic designer. The client has good credit but minimal taxable income reported for the last two years, though bank statements show consistent, substantial deposits. Which mortgage market participant is typically best positioned to assess and approve a mortgage for this client based on gross income or bank statements rather than strictly notice of assessment income?

Question: Jessica, a mortgage agent in Toronto, has a client who is self-employed as a graphic designer. The client has good credit but minimal taxable income reported for the last two years, though bank statements show consistent, substantial deposits. Which mortgage market participant is typically best positioned to assess and approve a mortgage for this client based on gross income or bank statements rather than strictly notice of assessment income?

Answer options:

• A large Canadian chartered bank (A-lender)
• A provincially regulated credit union that adheres to strict OSFI B-20 guidelines ✅ A 'B' lender or alternative lender specializing in non-prime mortgages
• CMHC, as they underwrite all self-employed mortgages differently

Correct answer: A 'B' lender or alternative lender specializing in non-prime mortgages

Explanation: B-lenders (alternative lenders) are known for their flexibility in underwriting and often cater to self-employed individuals with non-traditional income documentation, such as stated income or bank statement programs, as they are not governed by OSFI's B-20 regulations in the same manner as federally regulated A-lenders.