# How does rental income affect my mortgage qualification in Canada?

> Rental income from an existing or subject property can offset your mortgage costs and improve your TDS ratio — but lenders apply a haircut (typically 50-80% of gross rent) and require 2 years of rental history for existing properties.

Category: Qualification
Last verified: 2026-04-19
Source: https://ratellow.com/faqs/qualification/how-does-rental-income-affect-mortgage-qualification-canada

## Answer
**Rental income can meaningfully improve your mortgage qualification when handled correctly — but every lender applies it differently.**

## Types of Rental Income

### 1. Existing Rental Property You Own
- **A-lenders**: Typically apply 50% of gross rental income to offset carrying costs (the "rental offset" method). Some use 80% with an operating expense deduction.
- **Documentation**: 2 years of T1/T2 tax returns showing rental income, and current signed lease agreements.
- **No history yet**: If the property is vacant or newly acquired, lenders typically use market rent from an appraisal — at a 50% offset.

### 2. Subject Property with a Rental Suite
- For purchases where you'll occupy one unit and rent another (duplex, basement suite):
  - CMHC insured: 50-100% of rental income can be added to your qualifying income (varies by insurer)
  - A-lenders conventional: Usually 50% of market/actual rent is offset against the GDS/TDS cost
- **"Rental offset" vs "rental income"**: The offset method reduces your housing costs; the income method adds to your income. Offset is more conservative but widely accepted.

### 3. Airbnb / Short-Term Rental
- Treated with significant skepticism — most A-lenders require 2 years of T1 history showing STR income. B-lenders may accept 1 year with booking records.

## Key Rules

- **Investment property**: Always requires 20% minimum down payment regardless of purchase price.
- **Owner-occupied with suite**: Can qualify with standard down payment if you occupy the primary unit.

### Your Next Steps
1. **Calculate your numbers** → [Affordability Calculator](/mortgages/affordability-calculator)
2. **Read the guide** → [Rental Income Offsets](/guides/rental-income-offsets)
3. **Speak with a mortgage advisor** to confirm which rental offset method your lender uses

## Related guide
- https://ratellow.com/guides/rental-income-offsets

## Sources
- OSFI B-20: Income Verification Standards — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0
- CMHC Rental Suite Programs — https://www.cmhc-schl.gc.ca/consumers/home-buying/mortgage-loan-insurance-for-consumers