EQ Bank Mortgage Review: Rates, Lending Guidelines and Who They Suit

EQ Bank Mortgage Review: Programs & Lending Guidelines

How EQ Bank's lending guidelines read from the broker side — the programs on the shelf, how income is qualified, credit floors, terms and where they lend. Consumer-facing policy only: broker submission mechanics and compensation are out of scope, and guidelines change, so confirm anything you are planning around with the lender or a licensed broker.

EQ Bank's Mortgage Offering — Residential

This is alternative lending — the shelf for borrowers who do not fit a bank's rules but have equity, income the tax return does not show, or credit that needs a few years to heal. Nothing here is insured, so the down payment or equity does the work the insurer would otherwise do.

Purchases and refinances, on owner-occupied homes and on rental property, to 80% of value. One- to four-unit homes, condominiums including small ones, townhouses, custom-built and show homes, cottages, and laneway or garden suites.

Home equity lines of credit, in three shapes: combined with a mortgage under one registration; standalone in first position; and standalone in second position behind an existing mortgage — the last being genuinely uncommon and the reason a borrower who does not want to break a low-rate first mortgage ends up here.

Mortgages in a corporation. A holding or operating company can hold the mortgage, on owner-occupied property or rentals, with a personal guarantee behind it. On rentals there is no rate premium for doing so.

Also available: secondary financing to a combined 80%, portability with requalification, open terms, and assignment purchases in Ontario and British Columbia using the appraised value rather than the original builder price.

There is no construction financing and no switch or transfer program. Bridge financing exists in Manitoba only, and commercial lending in Ontario only through a separate team.

EQ Bank Income and Qualification Requirements

Ratios by program.

50/50 as the standard and 60/60 on the extended tier is at the generous end of the alternative market, and notably the extended ratio product carries no rate premium.

Qualifying rate. The greater of the contract rate plus two points or 5.25%.

How income is read. Employment income needs a recent employment letter and pay record, each no more than 60 days old, with the employer's contact details. Commission income needs only six months of history — one of the shortest requirements in the market — verified through statements, a commission letter or contracts. Seasonal income is considered with a longer track record.

Self-employed borrowers do not need two years of tax returns. Twelve months of business bank statements, commission statements, or the latest financials will establish income, alongside proof the business exists — a licence, articles of incorporation, or a tax registration number in place for two years — plus a signed declaration of income and expenses. Where the business is not registered, client reference letters can stand in. Only the most recent year is used, with no two-year averaging, which helps a business that is growing and hurts one that is not. Up to half of qualifying income can come from salaried employment alongside the business.

Pension income counts. Investment income counts with two years of history and confirmation of the portfolio. Maternity and parental leave income counts while on leave, and the return-to-work salary can be used within two months of the return date. Foster income counts with two years of experience. Child benefits count. Long-term disability counts, verified by the insurer; short-term does not. Support the borrower receives is accepted; support the borrower pays is added as a liability rather than netted from income.

Short-term rental, rideshare and delivery income all count — treated as self-employment, needing twelve months of bank statements and twelve months of platform statements. Most lenders on this list will not touch short-term rental income at all.

Non-taxable income is not grossed up.

Contributory income. A family member living in the home who is not on the mortgage can contribute up to $1,500 a month toward qualifying, capped at a fifth of total income, on owner-occupied property with a 600 score. Not combinable with the equity or extended ratio programs.

EQ Bank's Specialty Programs

TotalWORTH. The net worth program, for borrowers whose liquid assets rather than income carry the file. Two tiers: with debt service at or under 65%, lending to 80% of value with liquid assets equal to a quarter of the loan; with debt service to 80%, lending to 65% of value with liquid assets equal to half. Minimum score 600, minimum $75,000 in liquid assets, owner-occupied only. Equity in other properties, business interests, vehicles, art and life insurance cash value do not count — this is a liquid assets test, strictly.

Self-employed bank statement program. Income from twelve months of deposits, ratios to 60/60, lending to 80% with a strong score and 75% with a moderate one, owner-occupied only, at a modest rate premium.

Extended ratio program. 60/60 on owner-occupied homes and rentals with no rate premium, lending to 80% at a strong score and 75% at a moderate one. Available in selected regions.

Standalone second-position home equity line of credit. Behind an existing first mortgage, to 65% on its own and 80% combined, with limits from small draws up to seven figures. The practical use is obvious: a borrower with a cheap first mortgage who needs equity and does not want to break it.

New to Canada. Borrowers with no credit file and no permanent social insurance number are eligible, to 80% depending on province. Non-permanent residents qualify on a valid work permit not expiring within six months of the purchase.

Corporate lending. Mortgages in a holding or operating company to 80% owner-occupied and 70% on rentals, with a personal guarantee.

Assignment purchases (Ontario and British Columbia). Financing on the appraised value rather than the original builder contract price, in major urban centres, at stronger credit tiers, where the original purchase was at least six months before closing and the ratios stay within 48%.

Minimum Credit Scores & Treatment of Liabilities

There is no minimum credit score. Scores below 550 are considered on uninsured purchases and refinances at higher rates, and borrowers with no credit history at all are considered. Credit instead sets pricing through published tiers, running from the strongest band at 640 and above down through 600, 575, 559 and below.

Program-specific floors exist where the flexibility is greater: 600 for the net worth program, for rentals and for contributory income; 640 for assignment purchases; 670 or 720 for the higher loan-to-value tiers on extended ratios and the self-employed program.

Credit history. Bruised credit, a discharged bankruptcy and a discharged consumer proposal are all accepted. The bureau must be dated within 90 days of closing. Both bureaus are used.

Personal tax arrears are not permitted — taxes must be current, which is stricter than several alternative lenders that will pay arrears out of the proceeds.

Liabilities. Trade lines count at 3% of the balance unless the reported payment says otherwise. Condominium fees count at half. Support the borrower pays is added as a liability. Heating is a flat figure — higher for detached, semi-detached and townhouses, lower for condominium apartments — rather than a square-footage calculation. A borrower not occupying the property carries a shelter cost with a $500 floor. There is no 1.5% closing cost requirement, which quietly helps a tight file.

Rental offset is generous. 95% of rent is added back on the subject property and 95% offset on other rentals, against the 50% to 80% most lenders apply.

Terms & Amortization Options

Terms. One to five years, fixed or adjustable, open or closed, plus the line of credit products. Adjustable-rate mortgages here have no static payment — the payment moves the month after prime does.

Amortization. Up to 30 years across every product, including rentals. There is no shorter cap for investment property, which is not universal.

Payments. Weekly, biweekly, semi-monthly and monthly on fixed transactions.

Prepayment. Up to 20% of the original principal once in each twelve-month period, beginning at the interest adjustment date or an anniversary, with a $1,000 minimum.

Penalties. Fixed: the greater of three months' interest or an interest rate differential. Adjustable: three to five months' interest depending on how much of the term remains — worth noting, since three months is the usual figure on a variable elsewhere.

Rate float-down. One-time, before closing.

No pre-approvals. Live transactions only, so the process begins with a firm agreement.

Porting is available and requires full re-adjudication.

Registration is a standard charge on mortgages; the line of credit products are collateral charges.

Special Notes

• No minimum credit score, and no credit history is workable. Very few lenders publish that plainly. Score sets the rate rather than the yes or no.
• A standalone second-position line of credit is the differentiator. A borrower sitting on a first mortgage they do not want to break can take equity out behind it instead.
• Short-term rental income counts. Where most lenders exclude it outright, EQ takes it as self-employment income on twelve months of statements.
• Commission income after six months. The market standard is two years.
• Only the most recent year of self-employed income is used. No averaging — good for a growing business, unhelpful for one that had a better year two years ago.
• 95% rental offset, well above the 50% to 80% most lenders use, which is what makes a portfolio file work here.
• Up to ten properties in a portfolio, with a rate premium above five.
• Personal taxes must be current. No arrears, and no paying them out of the proceeds.
• Property taxes are paid by the lender.
• Very small condominiums are financed — down to 325 square feet, against the 500 to 650 most lenders require — which matters in downtown Toronto and Vancouver.
• Lender fees apply, varying by province and product, and are waived at the strongest credit tiers.
• Property standards. No adult lifestyle communities, mobile homes, condominium hotels, timeshares, fractional interests, co-operatives, rooming houses, bed and breakfasts, former grow operations, mixed-use zoning, buildings over four units, vacant land, or properties without sewage or septic. Nothing with asbestos or vermiculite. Septic systems are fine, and wood foundations are accepted on vacation properties.

Service Area

Approved municipalities across British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, covering the major centres — Vancouver, Calgary, Saskatoon, Winnipeg, Toronto and their surrounding regions — with other locations considered individually. Lending is by approved municipality rather than by province, so a property in a small community may fall outside the footprint even in a province that is otherwise served.

Market size drives loan-to-value. Smaller centres see the ceiling drop, in some cases to 65%.

Some programs are narrower still: assignment purchase financing runs in Ontario and British Columbia; bridge financing in Manitoba only; commercial lending in Ontario only.

Rural properties are considered where they are marketable, on a public road, with proper water and sewage, and lending value covers the home plus five acres, with no value for outbuildings. Agricultural-only zoning caps lending at 65%. Properties near wind farms are reviewed individually.

Loan-to-Value Treatment

Sliding scale in major centres: 80% on the first $2 million, 75% between $2 million and $2.5 million, and 70% above that. This treats large loans better than the half-value scales most lenders apply, and matters on expensive properties.

Minimums. $75,000 loan and $100,000 property value. Minimum sizes are 575 square feet for a detached home and 325 for a condominium.

Two things move the number in practice: the market, since smaller centres cap lower, and the credit tier, which on the extended ratio and self-employed programs is the difference between 75% and 80%.