Step-by-step client guide
Rental income on existing properties
Rental income helps you qualify — but not as much as the rent cheque suggests. Lenders apply offset or addback rules that shrink the apparent benefit.
Who this guide is for
Owners of one or more rental properties, house-hackers with a basement suite, anyone with a legal secondary suite contributing to carrying costs.
Why this is harder than a standard file
Common methods: 50% addback to income, 80% rental offset against carrying costs, or full T776 schedule on the T1 General. Each method changes the math.
Track exactly where you are on this file.
Tick off each step and document as you complete it. Progress saves on this device — no account, no sign-in. Pick up later from the resume banner.
Keep a clean rental ledger and deposit every rent cheque to a single account. Lenders want to see the deposits, not just the lease.
Your plan
0 of 3 plan steps completeDocuments to assemble
0 of 4 documents gatheredMistakes we see clients make in this scenario
- ·Reporting cash rent off the books. If it's not on the T1, the lender can't use it.
- ·Showing a lease with no matching deposits in the bank statements.
- ·Assuming the full rent counts. The 50% addback and 80% offset rules are industry-standard, not lender-specific.
Red flags that will sink the file
- T776 showing rental losses for multiple consecutive years.
- Leases with related parties (family members) and no arms-length verification.
What this realistically costs you
- No rate premium for rental income at A-lenders, but investment properties (non-owner-occupied) typically require 20% down and may carry a small rate add-on at some lenders.
How the underwriter actually reads this
Lenders that use the 80% offset method give the strongest qualification math; addback methods are more conservative. Choice of lender materially changes ratios.
What moves this file up
- Provide both leases and deposit history, not just leases
- Ensure T776 is filed and matches the rental program
- Match lender to the rental method that helps your file
Questions clients ask us
Yes — if the suite is legal and you can document the rent. Lenders use it the same way they treat other rental income (offset or addback).
Vacancy is baked into the offset/addback haircut. You don't need a separate vacancy adjustment.
Get a real, underwritten pre-approval — not a system-generated number.
We'll route your file to a lender whose policy fits this scenario. No credit pull until you've seen the plan.
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Written and reviewed by the Canadian Mortgage Compass Editorial Desk. This page is general information for Canadian readers and is not mortgage, legal, tax, or financial advice, and not an offer of credit. Rules, rates, and lender policies change; confirm your own situation with a licensed mortgage professional in your province. Editorial policy · Corrections