Most applications are decided by two numbers before anyone reads the rest of the file. If either one fails, nothing else in the application matters.
This page sets out those two ratios, the tests that quietly disqualify people, and what we check before an application is submitted at all.
Total Debt Service Ratio is capped at 40%. It is your total monthly debt payments divided by your gross monthly income, and it includes the new loan’s interest, your mortgage, car loans — and 10% of every credit card balance, not the minimum payment. That last one is the single most common reason a ratio comes out higher than people expect.
Worked example
40% is a hard line, not a guideline. Cross it and the application is declined automatically — there is no judgment call on that number.
The loan generally cannot exceed 50% of net worth — total assets minus total liabilities. Someone with $1,300,000 in assets and $453,000 in liabilities has $847,000 of net worth, so roughly $420,000 is the ceiling, regardless of income.
Both tests must pass. Strong income does not compensate for thin net worth, and a strong balance sheet does not compensate for a high debt service ratio.
On size: full-amount structures generally run from about $10,000 to $300,000. Multiplier structures reach higher but carry a different risk profile — see 100% no margin call vs multiplier.
Under two years in your current role. Employment under 24 months is a common decline even at high income.
A thin credit file. Lenders here look for an established history, commonly a score in the low 700s or above, and you must consent to a credit check before the application proceeds.
Recently arrived in Canada. Most programs expect roughly two years of Canadian credit and tax history.
Income that cannot be documented. Notices of assessment and pay records matter more than what the income actually is.
Programs differ. B2B Bank, iA and the other lenders in this market do not apply identical tests, and the same file can be assessed differently depending on where it goes.
We run both ratios before anything is submitted. If either fails, you find out in the first conversation rather than after a credit pull.
We will not submit an application we expect to be declined just to see what happens. A declined application leaves a mark; a five-minute calculation does not.
The full picture: how these loans work, what they cost, and where we decline to proceed.
Why the margin call clause matters more than the interest rate.
The loan does not move when the portfolio does. What that means in practice.
Borrowing to invest involves risk, including the risk that the value of your investment falls while the loan remains payable in full. This page describes how these arrangements work in general and is not a recommendation to borrow or an offer of credit. Suitability depends on individual circumstances.