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100% of Rental Income Used to Qualify for Mortgage

Blog by | September 8th, 2015

Effective September 28, CMHC will consider up to 100% of the gross rental income from a two-unit home (house with a suite) as personal income for mortgage qualifications. Previously up to 50% of the rental income could be counted as income, at the discretion of mortgage lenders. For up to four-unit rental properties, the net income can form part of the mortgage borrower's gross annual income, whether the property is owner-occupied or not.

Here are the CMHC rules for detached houses:

  • The property must be owner-occupied.
  • The property being insured can have only two units (i.e., a duplex or a single home with a legal secondary suite).
  • Rental income cannot be used if the suite is "illegal/non-conforming" but "legal non-conforming" is okay. (Non-conforming means that the suite was grandfathered in before zoning/regulations restricted such units. You can check with the city to confirm if a suite is legal.)
  • The suite must be self-contained with its own entrance.
  • For existing units, there must be two-year history of rental income from the suite. The maximum rental income allowed for qualification is a two-year average of the unit's rent.
  • For new units, a market rent appraisal can be accepted if an appropriate vacancy rate has been applied to the estimated rental income.
  • Mortgage applicants must "demonstrate a strong history of managing credit" with a minimum credit score of 680.

Alexandra Axsen
Lake Okanagan Realty Ltd.
Owner/Managing Broker
Tel: (250) 870-2792
Fax: (778) 484-5252
506 Doyle Avenue
Kelowna, BC V1Y 6V8