Citing OSFI, Canadian Mortgage Trends, REMI, GLM Mortgage Group, and industry mortgage analysts.
Canada’s mortgage landscape is shifting. Whether you’re a real estate agent, property manager, or someone thinking about buying an investment property, these new BC mortgage rule changes matter.
The Office of the Superintendent of Financial Institutions (OSFI) has updated how banks must classify mortgages on income-producing residential real estate (IPRRE) starting in 2026.
Note that OSFI clarified in November 2025 that the Final Capital Adequacy Requirements 2026 (CAR) update was not primarily about changing rental income treatment as these expectations have been in place since 2023. The update mainly clarified and formalized existing standards rather than introduced entirely new rules.
This isn’t a ban on using rental income — but it does change how lenders calculate risk, how much they can lend, and what documentation borrowers now need.
Below is a clear breakdown of what’s changing, what isn’t, and what it means for both real estate professionals and regular property owners.
What Is Changing (According to OSFI)
1. New Capital Adequacy Rules for “Income-Producing Residential Real Estate” (IPRRE)
OSFI’s updated Capital Adequacy Requirements (CAR) guideline changes how lenders must classify mortgages when a borrower relies heavily on rental income.
Sources: GLM Mortgage Group, OSFI, Canadian Mortgage Trends.
2. The 50% Rule — When a Mortgage Becomes “Income-Producing”
If more than 50% of the income used to qualify the borrower comes from rental income, the mortgage may be treated as IPRRE.
Sources: GLM Mortgage Group, Rob Lough (Broker).
This triggers higher capital requirements, meaning the loan is considered higher risk for the bank.
3. No More “Double-Counting” Income Across Mortgages
If rental income was used to qualify for Property A, that same income cannot automatically be reused to qualify for Property B unless the borrower shows sufficient, independent income streams.
Sources: Canadian Mortgage Trends, MMG Mortgages.
This will most affect small investors who depend on rental income to scale.
4. Rental Income Is Still Allowed — OSFI Confirms This
OSFI explicitly states:
“Investor-owners and other borrowers can continue using rental and non-rental income…”
OSFI (2025)
This is not a ban. It’s a stricter classification and risk-weighting system for lenders.
What Isn’t True (Despite Viral Posts)
There’s been a lot of confusion online. Here’s what the rules do not say:
“You can’t use rental income to qualify anymore.”
Incorrect — rental income is still allowed.
Source: OSFI.
“Investors will qualify for half as much.”
Not universal. Impact varies by property type, borrower income, rent levels, and lender policy.
“This shuts out all small investors.”
Not accurate. It does slow scaling but doesn’t eliminate financing.
“Existing mortgages will instantly be affected.”
Rules target new originations beginning in 2026. Existing mortgages and renewals may be treated differently depending on lender policy.
Source: MMG Mortgages.
What This Means for Everyday People Wanting to Invest in a Rental Property
Here’s the practical impact of the new BC mortgage rules on Canadian and BC property owners:
1. Using Rental Income for Multiple Properties Will Be Harder
If you used rental income to qualify for one property, you may not be able to reuse that same income for another unless you show independent income.
This affects “snowball” investors the most.
2. Some Investment Mortgages May Come with Higher Rates
When a loan is classified as IPRRE, banks must set aside more capital. A higher bank risk = higher rates.
Sources: Valery M., mortgage analysts.
3. Strong Cash-Flow Properties Will Qualify More Easily
Higher rents + lower expenses = stronger qualification.
4. First-Time Buyers Are Not the Target of These Rules
Primary residence buyers and investors who qualify mostly on employment income are least affected.
5. There may be less competition from fast-scaling investors
This could open opportunities for small investors or live-in landlords, though long-term it may reduce rental supply.
What This Means Specifically in BC
BC’s market is unusual: very high prices, slower rent-to-mortgage ratios.
Why this matters:
- In Vancouver/Burnaby/North Shore: rents rarely make up 50%+ of qualifying income → fewer IPRRE classifications.
- In Surrey, Langford, Kelowna, Kamloops: prices are more moderate and rents carry more weight → more properties may hit the 50% threshold.
Sources: Elevate Realty, GLM Mortgage Group.
Implication for BC investors:
- If you’re planning to scale to multiple properties: begin preparing documentation and financing strategy now.
- If you’re a single-property investor renting out a suite: likely minimal change.
Key Points for Existing Real Estate Agents
What Agents Need to Understand (and Teach Clients):
How lenders calculate rental income and “global debt ratios.”
- How OSFI’s >50% rule triggers IPRRE classification.
- When a rental qualifies as “income-producing” on paper (even if it feels small).
- Why double-counting rental income will no longer be allowed.
- How portfolio investors qualify differently from primary-residence buyers.
- How to help clients prepare:
- Document all rental and employment income
- Reduce expenses
- Show stable, sustainable rents
- Avoid relying on rental income across too many mortgages
- Which BC markets are impacted most (Surrey, Kelowna, Kamloops).
- How to communicate these changes to investors without making it scarier than seems.
For real estate agents, this is a major value-add moment.
Your clients will look to you for clarity on financing, qualification, and investment strategy, especially as current online rumours are confusing people.
Key Points for Everyday Property Owners & Small Investors
If you want to buy a rental property, here’s what you need to know:
- You can still use rental income to qualify — the rules didn’t remove this.
- If you rely on rental income heavily, expect more documentation and possibly higher pricing.
- If you want multiple properties, you can’t reuse the same income stream across mortgages.
- Properties with stronger cash flow (good rent relative to price) will qualify more easily.
- BC’s high-price, low-rent ratio may protect some buyers from the >50% rule.
- Talk to a mortgage broker early — these rules are technical, and interpretation varies by lender.
How Investors Can Prepare
- Strengthen personal income documentation
- Improve rental income (market-rate rents, lower expenses)
- Maintain low vacancy
- Avoid stretching one income stream across multiple properties
- Speak with a mortgage broker before applying
- Consider joint ventures or co-signing arrangements
New BC Mortgage Rules: Bottom Line
The new BC mortgage rules represent a clarification and formalization of guidelines that were already in effect, not a completely new regulatory shift
That being said, the updated mortgage rules do not ban rental-income qualification — but they do make it more conservative, more documented, and more lender-specific.
For investors:
Scaling will be slower and more methodical, but still possible.
For real estate agents:
Understanding these rules is now a core part of advising clients, investors, and future licensees.
Disclaimer:
This article is provided for general informational purposes only. Mortgage regulations, lending policies, and qualification rules can change and may be interpreted differently by individual lenders. This content is not financial, legal, or mortgage advice. Readers should consult a licensed mortgage broker, lender, accountant, or legal professional before making financing or investment decisions.
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