In a recent blog post, we explored the Loan-to-Income (LTI) limits introduced by OSFI and their potential to reshape the mortgage landscape. If you’ve read that post, you’re already familiar with how LTI caps can restrict borrowers with higher loan-to-income ratios.
Read the old post here.

But there’s more to the story. These limits don’t just impact how much you can borrow—they can also determine where you can borrow.

Here’s an update on the evolving implications of LTI limits and why working with a mortgage broker is the smartest move in this unpredictable environment.

A Quick Recap: What Are LTI Limits?

Introduced on November 1, 2024, LTI limits cap the percentage of a lender’s mortgage portfolio that can consist of loans exceeding 450% of a borrower’s gross income. While the caps vary by lender (reportedly between 15% and 25%), these thresholds are reset every fiscal quarter. This means:

• A borrower could be declined by one lender simply because they’ve maxed out their high-LTI capacity.

• The same borrower might be approved by another lender with room to accommodate high-LTI loans.

The Inconsistencies LTI Creates

1. Lender-to-Lender Variability
   The new rules mean that some lenders might reject your application, not because of your financial situation, but because their LTI quota is full. On the flip side, another lender could approve the same application with ease.

2. Timing Is Everything
   Borrowers with higher LTI ratios may have a better chance of approval early in the fiscal quarter when lenders reset their LTI limits. As the quarter progresses and lenders reach their quotas, approvals for high-LTI loans can become harder to secure.

3. More Work for Borrowers
   Without guidance, borrowers might need to apply to multiple lenders to find one with available LTI capacity. This inefficiency can lead to delays and frustration, especially if borrowers aren’t aware of how LTI policies work.

Why a Mortgage Broker is Your Best Advocate

When navigating the LTI-driven inconsistencies among lenders, a mortgage broker becomes an invaluable ally. Here’s how we make the process simpler and more efficient:

• Access to Multiple Lenders
  Brokers have partnerships with a wide range of lenders, including banks, credit unions, and alternative lenders. If one lender’s LTI limit is maxed out, we can seamlessly connect you with another that still has room.

• Strategic Timing
  Brokers understand how quarterly LTI resets work and can guide you to the right lender at the right time, maximizing your chances of approval.

• Tailored Approvals
  We know the nuances of each lender’s criteria and can match your application with the institution most likely to approve it, reducing the risk of rejection.

• Efficiency and Expertise
  Instead of applying to multiple lenders on your own, we handle the legwork for you, saving you time and stress.

Looking Ahead: Will LTI Replace the Stress Test?

Industry insiders are speculating that LTI limits could eventually replace the minimum qualifying rate (MQR), also known as the stress test, by 2025 or 2026. While this may simplify qualification criteria, it could also heighten the inconsistencies created by LTI caps. For now, both measures are being applied simultaneously, making expert guidance even more crucial.

Your Next Step: Simplify the Process with Expert Help

Navigating the complexities of LTI limits and lender-specific guidelines can feel overwhelming, but you don’t have to do it alone. At Mortgage Fernando, we specialize in guiding borrowers through these challenges, ensuring you find the best lender and the best terms for your mortgage.

If you’re feeling the impact of LTI limits—or just want clarity on your mortgage options—book a consultation today. Let’s turn unpredictability into peace of mind and put you on the path to homeownership with confidence.