CMHC Secondary Suite Rules.

[Dylan2457]

I'm pretty new to all of this and I'm looking to purchase my first home in March. I've read a few different articles on the new rules for using secondary suites as income towards a mortage. My situation is this; the home I'm looking at purchasing has a two bedroom legal basement suite that rents for $1800. However the home is slightly out of what I can be approved for. Can I use this income against the mortage containing the basement suite? or does it only work when you already own the home with the basement suite and you're looking for a second mortage? Any help clearing this up will be greatly appreciated.

 

[Matt Crowley]

Calum Ross has written a few good articles on this subject:
http://www.calumross.com/blog/uncategorised/cmhcsecondarysuites/

CMHC overview of secondary suites:
http://www.cmhc-schl.gc.ca/en/inpr/afhoce/afhoce/afhostcast/afhoid/pore/pesesu/pesesu_001.cfm

Quick summary: http://teamfisher.com/cmhc-announce...o-purchase-homes-with-secondary-rental-suites

 

[Dylan2457]

Thank you very much!

 

[SVS]

Check with your realtor and mortgage broker and make sure they understand! I had issue with a mortgage broker telling me it was impossible because they didn't know better.

 

[Dylan2457]

Will do! Again thank you guys for your time.

 

[Kir Luong]

Just ask the bank how they will rental income from principal residence.

 

[Tina Myrvang]

All rents are considered income when you are qualifying for a mortgage. They (the Lender) will want a lease agreement to prove it is rented or will be rented. They will register an Assignment of Rents on your mortgage. Please make sure you use a good Mortgage Broker that knows the rules for underwriting your mortgage using your rental income to help quality.

 

[Dylan2457]

Are the banks strict on whether or not the suite is legal or not? Or most interested in the signed lease?

 

[Alex Pang]

Most lenders will require a signed lease agreement, or if the unit has not yet been rented, an economic rent letter from an appraiser. Rental income is counted differently depending on how much you're putting down. If you're putting less than 20% down and have to insure the mortgage, lenders will count 50% or 100% of the rental income (despite the CMHC announcement, some lenders still only use 50%). If you're putting more than 20% down, some lenders will offset the expenses by 50-90% (a more favourable underwriting calculation).

Depending on the area you live in, the basement suite doesn't have to be legal. As long as it has a separate entrance in the case of Vancouver.

Talk to your local mortgage broker about different lenders' guidelines on basement suite rental income. Good luck!