Big Changes Coming for Real Estate Investors in 2026

Starting January 2026, the Office of the Superintendent of Financial Institutions (OSFI) will introduce new mortgage qualification rules that change how rental income can be used when applying for investment property financing.

These updates are designed to reduce risk for lenders but will also make it more challenging for investors to grow their portfolios using leveraged rental income.

Here’s what you need to know:

What’s Changing

The new rules focus on how banks assess borrower qualifications and risk for residential properties that generate income.

Key highlights:

• No More Reusing Rental Income
  Rental income used to qualify for one property can no longer be applied toward another mortgage. In other words, investors won’t be able to use the same income stream multiple times to support additional purchases.

• Tighter Rules for Income-Dependent Properties
  If a property’s ability to repay the mortgage depends mainly on rental or leasing income, it will fall under a stricter risk category. Lenders will be required to hold more capital against these loans, which could mean tougher approval standards.

• Higher Capital Requirements for Lenders
  Banks and other lenders must keep more funds in reserve for income-producing properties, potentially leading to tighter lending criteria or slightly higher interest rates for investors.

How Rental Income Will Be Calculated

OSFI has clarified that only net rental income (after expenses) can be used when qualifying for the specific property being financed.

Other important details:

• Rental income from one property can’t be reused to qualify for another mortgage.

• Employment income must also be used carefully if it supports one loan, it can’t be applied to a second.

• Each lender will release its own guidelines in the coming months, so expect some variation in how these rules are implemented.

What This Means for Buyers and Investors

For real estate investors:

• Growing a portfolio will become more difficult, as leveraging rental income across multiple properties won’t be possible.

• Expect more paperwork and scrutiny around income sources and property performance.

• Borrowing power may be reduced, particularly for highly leveraged investors.

For first-time buyers and single-property owners:

• The impact will be minimal unless the property produces rental income.

• Some may actually benefit from less competition in investment-heavy markets.

What’s Next

We’ll continue to monitor how banks and lenders adjust their internal policies leading up to 2026. As more details are released, we’ll provide updates to help you stay informed whether you’re a first-time buyer or a seasoned investor planning your next move.

If you’d like to discuss how these changes could affect your mortgage strategy, reach out!