Wishing you an outstanding 2016 full of unconditional love, pure joy, abundant peace, amazing happiness, blessed memories, incredible health of mind, body and soul with a cup of overflowing prosperity! Happy New Year!!!
In a bold move Canadian underwriter, CMHC (Canadian Mortgage and Housing Corporation) has announced it will now allow 100% of rental income generated by legally registered suites. Here is the initial breakdown on using this type of rental income:
The property must be owner-occupied.
The property being insured can have only two units (i.e., a duplex or a single home with a legal secondary suite).
Rental income cannot be used if the suite is “illegal/non-conforming” but “legal non-conforming” is okay. (Non-conforming means that the suite was grandfathered in before zoning/regulations restricted such units. You can check with the city to confirm if a suite is legal.)
The suite must be self-contained with its own entrance.
Property taxes and heat must be factored into the borrower’s debt ratios (which is currently not the case when using rent from legal secondary suites).
For existing units, there must be two-year history of rental income from the suite. The maximum rental income allowed for qualification is a two-year average of the unit’s rent.
For new units, a market rent appraisal can be accepted if an appropriate vacancy rate has been applied to the estimated rental income.
Mortgage applicants must “demonstrate a strong history of managing credit” with a minimum credit score of 680.