Navigate the updated mortgage rules for rental properties, from income add-backs to stress test requirements.
Ontario's rental market continues to attract investors seeking stable returns and portfolio diversification. However, 2026 brings updated mortgage qualification rules that every investor needs to understand.
From stricter stress test requirements to new rental income calculations, the path to qualifying for a rental property mortgage has evolved. Here's what you need to know to position yourself for success in Ontario's rental investment landscape.
One of the biggest changes in 2026 involves how rental income is calculated for mortgage qualification. Lenders now use a more conservative approach to rental income add-backs.
With the 70% rule, a property generating $2,000/month in rental income now only adds $1,400 to your monthly qualifying income—down from $1,600 previously. This could reduce your maximum purchase price by 10-15% depending on your situation.
Pro Tip: Consider locking in tenants with longer leases (12-24 months) before applying. Some lenders will use 75% of rental income if you can demonstrate a 2+ year lease with reliable tenants.
Investment properties in Ontario now require significantly higher down payments compared to primary residences. This change aims to ensure investors have genuine skin in the game and can weather market fluctuations.
20%
minimum down payment required
25-30%
for investors with multiple properties
| Requirement | Standard | With CMHC |
|---|---|---|
| Down Payment | $100,000 (20%) | $75,000 (15%) |
| CMHC Premium | $0 | $17,000-21,000 |
| Total Cash Required | $100,000+ | $92,000-96,000 |
Investment property mortgages face stricter stress test requirements than primary residences. Understanding these rules is crucial for successful qualification.
Let's say you qualify for a $500,000 mortgage at 5.25% interest with 25-year amortization. Your monthly payment would be approximately $2,975. Under the stress test with +2%, you'd need to qualify at approximately $3,500/month—significantly affecting your buying power.
Strategy: Consider working with a mortgage broker who has access to alternative lenders. Some portfolio lenders and credit unions offer more flexible stress test requirements for experienced investors with strong track records.
Ontario's rent control regulations significantly impact investment returns and lender assessments. Understanding these rules is essential for any Ontario rental property investor.
The LTB handles disputes between landlords and tenants, and their decisions can impact your investment returns. Key things to know:
Mortgage lenders increasingly factor rent control into their risk assessments. Properties in rent-controlled buildings may receive lower appraisal values, and lenders may require more conservative debt service calculations.
Investment Tip
Consider properties exempt from rent control (post-2018 construction) for better long-term cash flow potential. While these may have higher purchase prices, the ability to increase rent more freely can improve your return on investment.
Our team specializes in helping investors navigate the 2026 mortgage landscape. Get personalized advice on qualifying for your next rental property.