Canada Mortgage and Housing Corp. announced changes Monday that will make it easier for homeowners to rent out their residences and qualify for a loan.
The Crown corporation, which controls a majority of the mortgage default insurance market, says that starting Sept. 28 homeowners will able to count all the income from rental units when qualifying for a loan.
“Secondary rental suites are recognized as a source of affordable housing offered at a cost that is often lower than those for apartments in purpose built rental buildings,” the Crown Corporation said in a notice on its website.
Homeowners with less than a 20% down payment and borrowing from a regulated financial institution must get government backed mortgage default insurance. Even financial institutions not regulated by Ottawa, like credit unions, must abide by CMHC rules to be covered by the government backing.
Under the new rules, CMHC will consider up to 100% of gross rental income from a two-unit owner-occupied property that is the subject of a loan application submitted for insurance. The annual principal, interest, municipal tax and heat for the property including the secondary suite must be used when calculating the debt service ratios.