New Mortgage Rules in 2026: What Canadian Rental Property Buyers Need to Know
Starting January 2026, new mortgage rules will change how banks assess rental and investment properties in Canada. These changes are issued by the Office of the Superintendent of Financial Institutions (OSFI) and are intended to reduce risk in the financial system.
If you own — or plan to buy — a rental property, here’s what matters.
Why the Rules Are Changing
OSFI requires federally regulated banks to maintain sufficient financial “cushion” (capital) to protect against losses. In 2026, OSFI is tightening how rental-income mortgages are treated because loans that rely heavily on rent are considered riskier, especially when investors own multiple properties.
The Biggest Change: Rental Income Can’t Be Reused
Under the new rules, rental income can no longer be reused to qualify for multiple mortgages. Previously, investors could use income from one rental to help qualify for another property — and sometimes several more. Starting in 2026, each mortgage must qualify on its own, supported by its own income.
Plain and simple:
The same rent cheque can’t be counted more than once.
Rental-Heavy Mortgages Are Now “Higher Risk” for Banks
If more than about half of the income used to qualify comes from rental income, banks must treat that mortgage as higher risk.
That doesn’t mean rental properties are banned — but it may lead to:
Tighter approvals
More paperwork
Slightly higher interest rates
Lower maximum borrowing amounts
This is because banks must hold more capital against these loans under OSFI’s 2026 capital rules.
Investor Workarounds: What Options Still Exist?
While major banks and credit unions must follow OSFI’s rules, not all lenders are regulated the same way. Some investors may explore alternative financing options:
1. B Lenders
B lenders (often trust companies or mortgage finance firms) are not always subject to OSFI’s capital rules.
They may:
Be more flexible with rental income
Allow different qualification methods
Look more at the property than the borrower
Trade-off: Higher interest rates and fees than major banks.
2. Private Lenders
Private mortgages are funded by individuals or private corporations.
They often:
Focus on property value and equity
Care less about income ratios
Move faster than traditional lenders
Trade-off: Shorter terms, higher rates, and usually intended as temporary financing.
3. Using Equity Instead of Income
Some investors may:
Refinance existing properties
Use HELOCs or equity take-outs
Reduce reliance on rental income qualification
This shifts the focus from cash flow to available equity.
Important Note
Alternative lending is not a loophole, and it comes with higher costs and risks. These strategies work best when used intentionally — often as short-term solutions — and with a clear exit plan back to traditional financing.
Who Is Most Affected?
Real estate investors
Portfolio growth may slow
Financing strategy matters more than ever
Strong cash flow and equity are key
Homebuyers living in the home
Minimal direct impact
May benefit from reduced investor competition
The Bottom Line
Starting in 2026:
Rental income can’t be reused across mortgages
Rental-heavy loans face tighter scrutiny
Banks may lend more conservatively
Rental investing in Canada isn’t going away — but easy leverage is. Investors who understand their financing options early, including alternative lenders, will be better positioned to adapt.
We are not mortgage or financial professionals however, we are well connected to companies and individuals that are! If you’d like to discover more information please reach out to us and we will direct you to the right person.