.png)
OSFI (Regulator of Banking in Canada) has tightened how banks qualify mortgages for rental and investment properties. These are lender-facing rules, but they directly change what investors must bring to the table when buying or refinancing rental units. Below is a summary of the changes, how they’ll affect small investors and sellers in Calgary, and practical next steps.
What Changed?
No double-counting rental income: Lenders can’t use the same rental income stream to qualify a borrower across multiple mortgages – each property must independently support its financing
Stricter classification for income-dependent loans: If mortgage repayment relies heavily on rental revenue, loans are classified as “income‑producing residential real estate,” triggering tougher underwriting standards
Short-term rental expense limits: CRA rules now restrict expense deductions (including mortgage interest) for short‑term rentals that aren’t licensed or permitted locally — reducing allowable deductions and impacting cash flow
Impact on Small Investors
Lower qualifying power: Expect lenders to count less rental income toward qualifying ratios; multi-property investors will see borrowing capacity shrink
Higher down‑payment and rate risk: Some lenders will tighten LTVs or add investor overlays; investment mortgages may carry higher rates and stricter terms
Less leverage for portfolio growth: Deals that worked under previous rules may no longer cashflow after conservative underwriting and higher financing costs
Greater documentation requirements: Lenders will demand solid lease records, tax filings, rent rolls and proof of local licensing for short‑term rentals
Impact on Sellers of Rental Properties
Smaller buyer pool: With stricter qualifying, fewer investors will qualify — expect longer marketing times for pure investment listings
Pricing sensitivity: Cap rates and buyer yield expectations will adjust; some buyers will seek lower prices or seller financing to bridge gaps
Marketing must be lender-friendly: Present thorough income documentation, low vacancy history, and recent expense records to reassure buyers and their lenders
Opportunity for owner-occupiers: Reduced investor demand can create buying opportunities for owner-occupiers or well‑capitalized investors
Practical steps for YOU (Calgary Investors and Sellers)
Talk to a mortgage broker now: Get lender‑specific guidance on investor overlays, qualifying runs and down‑payment needs before making offers
Clean and compile your paperwork: Lease agreements, T‑series/rental income on tax returns, rent rolls, tenant payment histories and local licensing for short‑term rentals
Re-run your deal math conservatively: Use lower rent assumptions, higher qualifying rates and increased financing costs to stress‑test cash flow (I always sensitize my most conservative scenario, and an “OK” economic scenario to understand the downside risk – never make an investment decision only based on the “BEST” case scenario)
Consider alternative strategies: Larger down payments, partner equity, private lending, or seller financing can bridge financing gaps — evaluate costs and exit plans; understand your EXIT! You wouldn’t enter into a legally binding agreement without understanding if there are any HOOKS and same with investments (whether is a sale, refinancing, flip, etc.) know your options
Update marketing for sellers: Put verified income documentation in the data package and highlight low vacancy, recent capital improvements and professional property management (work with a professional that understands these market changes)
Bottom Line: These rule changes reduce leverage and increase lender scrutiny for rental-property financing.
For Calgary investors, the practical result is tighter qualifying, potentially higher costs, and a need for cleaner documentation and more equity.
For sellers, expect a smaller pool of investor buyers and a need to present income confidently. Work with a mortgage broker and a local agent familiar with investor financing to preserve deal viability and adapt your strategy.
Reach out if you want me to run the numbers on a property to show you how these rule changes affect your cash flow position!
