Under current OSFI guidelines, which borrower scenario would most likely face additional scrutiny for mortgage qualification?
Correct Answer
A) A self-employed borrower with irregular income and 15% down payment
OSFI guidelines require enhanced scrutiny for self-employed borrowers, particularly those with irregular income patterns and lower down payments. Lenders must verify income more rigorously and may require additional documentation or higher qualifying ratios.
Why This Is the Correct Answer
Option A is correct because OSFI guidelines specifically identify self-employed borrowers with irregular income as requiring enhanced scrutiny. The B-20 guideline mandates rigorous income verification for self-employed individuals, often requiring multiple years of tax returns, financial statements, and business documentation. Combined with a 15% down payment (below the 20% threshold that avoids mortgage insurance), this scenario presents elevated risk requiring additional documentation, potentially higher qualifying ratios, and more conservative lending practices.
Why the Other Options Are Wrong
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