CMHC is showing some love for basement apartments.

The Canada Mortgage and Housing Corp. has changed some rules that will allow homeowners to include 100% of their rental income when calculating their debt service ratios.

This is a very interesting shift in policy, so let’s go through the basic points.

Let’s say you want to buy a house, but can’t scratch together more than 20% of the down payment.  And let’s say you want to help pay for your mortgage by renting out your basement to a tenant.   In Canada, if you’re buying a house with less than 20% down and need a mortgage from a federally regulated financial institution, you need to qualify for government-backed mortgage insurance.  This is where this new rule kicks in.  It used to be that CMHC, the crown-owned mortgage insurance company, allowed only 50% of rental income to be counted when considering a loan application, but the new rule boosts this to the full 100%.

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