The revised OSFI rental property mortgage guidelines, effective 2026, tighten how rental income can be used across multiple properties, raise capital requirements for lenders, and introduce stricter standards for classifying income-producing real estate. These changes will affect investors building portfolios, borrowers seeking financing, and banks balancing risk under Canada’s evolving mortgage regulations.
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Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), has finalized revisions to its Capital Adequacy Requirements guideline, clarifying how banks must treat income-producing residential real estate for the purpose of consistency in mortgage qualification and risk treatment across lenders.
The revisions take effect in the first quarter of 2026, but their impact will be felt well before, as preparations for these stricter standards are made. In this blog piece, we explain them in detail and lay out the implications for stakeholders, namely borrowers and lenders.
No More Double-Counting of Rental Income
The biggest update is the removal of “double-counting.” In the past, investors could use the same rental income to support multiple mortgage applications. Under the new revisions, that practice will no longer be allowed.
Example
If Property A generates $2,000 in monthly rent, that income can be used to qualify for a mortgage on Property B. But when applying for Property C, the same $2,000 cannot be used again.
For borrowers, it means every new property must stand on its own with verifiable income, which makes it harder to keep expanding portfolios through leverage.
What Counts as an Income-Producing Property?
OSFI clarified that a mortgage is considered income-producing if more than half of the qualifying income comes from the property itself. This aligns with the long-standing 50 percent test.
For lenders, this classification triggers higher capital requirements, and because holding capital is costly, these mortgages often carry higher interest rates or stricter conditions. For borrowers, the result is that mortgages tied to rental or investment properties may become more expensive and harder to secure.
Implications for Real Estate Investors
The new revisions have clear consequences for those building rental portfolios.
- Scaling portfolios: Investors will no longer be able to rely on recycled rental income to qualify for new purchases. Each property must generate its own qualifying income, making it harder to expand using the same leverage strategies.
- Higher costs: Since banks must set aside more capital, loans for rental and investment properties will be more expensive.
Together, these changes slow speculative borrowing and force lenders to measure the true limits of a borrower’s financial capacity. In turn, this may cool demand in market segments heavily driven by investors.
Broader Regulatory Context
Alongside the income-producing property changes, OSFI announced several other adjustments:
- Combined Loan Products: If one loan tied to a property defaults, all loans secured by that property will be treated as defaulted.
- Capital Floors for New Banks: New institutions will face stricter initial requirements before easing over time.
- Credit Risk Management Guideline (2026): A new, unified framework will replace and modernize current rules, including the well-known B-20 mortgage guideline.
Together, these reforms underscore OSFI’s priority of strengthening the link between credit risk and real estate lending.
Bottom Line
The new OSFI rental property mortgage revisions are part of a broader effort to strengthen Canada’s housing finance system. They place stricter limits on how rental income is used and require lenders to apply tighter standards to mortgages tied to investment properties.
If you own or are considering buying income-producing real estate, it is essential to understand these revisions now. They will shape how banks assess risk and how much credit will be available in the years ahead. As these standards roll out, borrowers will need to rethink strategies in a housing market already strained by affordability and supply challenges.
Frequently Asked Questions (FAQs)
Q1. When do new OSFI rental property mortgage revisions take effect?
The new OSFI rental property mortgage revisions apply beginning in the first quarter of 2026.
Q2. Can I use rental income to qualify for a mortgage in Canada?
Yes, you can still use rental income. Under the updated guidelines, the same income cannot be counted more than once across multiple properties. Each property’s income must be unique and verifiable.
Q3. What is considered an income-producing property under new OSFI guidelines?
OSFI clarified that a mortgage is considered an OSFI income-producing property loan when more than half of the qualifying income comes from the property itself.
Q4. How will OSFI rental property mortgage revisions affect real estate investors?
Investors who own multiple rental properties will face tighter borrowing limits. They cannot recycle the same rental income to expand their portfolios, which may slow speculative growth in the housing market.
Q5. Why is OSFI making these changes?
The purpose of the OSFI rental property mortgage revisions is to strengthen Canada’s housing finance system. By tightening how income is used and classified, OSFI reduces the risk of over-leveraging and ensures banks capture the true financial capacity of borrowers.
ABOUT THE AUTHOR
Daniel Foch is the Chief Real Estate Officer at Valery, and Host of Canada’s #1 real estate podcast. As co-founder of The Habistat, the onboard data science platform for TRREB & Proptx, he has helped the real estate industry to become more transparent, using real-time housing market data to inform decision making for key stakeholders. With over 15 years of experience in the real estate industry, Daniel has advised a broad spectrum of real estate market participants, from 3 levels of government to some of Canada’s largest developers.
Daniel is a trusted voice in the Canadian real estate market, regularly contributing to media outlets such as The Wall Street Journal, CBC, Bloomberg, The Globe & Mail, Storeys and Real Estate Magazine (REM). His expertise and balanced insights have garnered a dedicated audience of over 100,000 real estate investors across multiple social media platforms, where he shares primary research and market analysis.