What is a rental offset, and why is it important when purchasing investment properties?

Rental offset is the percentage of rental income a lender will use to qualify you for a mortgage. Usually, this amount gets deducted from the borrower’s liabilities to help reduce the total debt service ratio.

Working with a mortgage broker ensures you maximize your chances of being approved by using a favourable rental offset rule whether you are buying your primary home and own other rental properties or building your investment portfolio. 

While some lenders only use a 50% rental offset, others will use up to 100% of the rental income you receive to help you obtain adequate mortgage financing. 

If you are purchasing a second home or a property with up to two units, for example, CMHC currently allows up to 100% of the rental income, if eligible, to get added to gross annual income. It also allows the exclusion of property taxes and heat. 

Using favourable rental offsets is critical in qualifying for a mortgage and getting the best interest rate. 

For more information, please call or write. 

You can also visit CMHC  Rental Offsets.

Sarah A. Colucci
Mortgage Agent, Lic. M140000929
Mortgage Edge, Broker 10680 
Direct: (647) 773-4849
Email: sarah.colucci@mortgageedge.ca

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