As of September 28th, 2015, CMHC will be changing it’s borrowing rules to help facilitate more affordable housing in Canada.
Currently, home owners with legal rental units can use 50% of the rental income towards their total income which means that home buyers can borrow more money.
When the new rules come into affect, borrowers can count 100% of the rental income towards their total income.
Borrowers with less than 20% downpayment are required to buy mortgage default insurance which is available from CMHC, Genworth Canada and Canada Guarantee.
So if you have less than 20% and are interested in buying a home with a legal rental unit, CMHC will be the insurer for you.
But keep in mind that only legal units are eligible. Eligible 2-unit properties must be owner-occupied. The dwelling types are typically duplexes or single homes with a legal secondary suite. Some examples of typical secondary suites in 2-unit homes include self-contained basement rental suites, in-law apartments and garden suites (i.e. laneway homes).
If you are considering buying a rental property, talk to me and I can help you find the mortgage product that will suit your situation.