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Trying to qualify for a huge mortgage without sufficient income will not work
Caller: Hello is that Ross? I just put an offer on a house for $3.1 million and I want to put it in my sister’s name. Can you do a mortgage for her?
Ross: Hi, yes it’s me. I’d be glad to help – tell me about the property and your sister please.
Caller: It’s a nice 6,000 square foot home in Thornhill. I want to put 25% down and finance the rest. I have my own company with 21 employees – it’s no problem for me.
Ross: Okay, why put it in your sister’s name? What does she do for a living?
Caller: I have my own thing going. My sister is unemployed, but she has great credit, and I can write a letter saying she works for my company – she can make $100,000 or so – that’s good right?
Ross: I’m not sure you realize how expensive the mortgage would be. A mortgage of $2,325,000 at 3.19% would have a monthly payment of $16,246.00!
Caller: So you are saying $100,000 income is not enough?
Ross: I’m saying that to have a chance of qualifying for such a huge mortgage, a person would need to be able to verify income over $300,000 per year. Very, very few people make that kind of money.
Caller: Ah, ok. Well that’s no problem – let’s just write a letter that says she makes $300,000 per year, right?
Ross: Um, I think you need to rethink this whole thing. The good news is you have around $750,000 available to buy a property, so there should be lots of beautiful houses in Thornhill that fit your budget. But it won’t be this one at over $3.1 million. And there is no need to do this funny stuff with your poor sister – I’m pretty sure we can fit you into a home purchase yourself – as you say, you are a successful small business owner.
Caller: I guess I called the wrong guy then. Your advertising says “Mortgages for any situation”, but you can’t even do a simple deal like this one.
Ross: I hear you sir, but there are limits to everything. Like I said, I am confident I can arrange a mortgage for you on a different home – but as my mama always said “Don’t hang your hat where your hands can’t reach.”
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Ross Taylor
One of Toronto/GTA's Most Trusted and Knowledgable Mortgage Agents
Ross Taylor is recognized by his peers as one of Canada's pre-eminent difficult mortgage specialists. His ASKROSS blog and column in Canadian Mortgage Trends are focused on the intersection between mortgage financing and personal credit.
With unique dual certification as a licensed credit counselor and mortgage agent, Ross's insights are valued by mortgage professionals and homebuyers alike.
If you have questions about anything financial or mortgage-related, please contact [email protected]. Ross answers everyone personally.
For more information, visit About Ross Taylor.
