Last week, a representative from OSFI (the Canadian bank regulator) made some comments about incoming rules for rental property mortgages that caused a bunch of confusion, as they seemed to imply that it would suddenly become MUCH more difficult for regular individuals and small scale landlords to qualify for residential rental property mortgages.

However, today they announced some clarification and luckily, the sky is not falling on the dreams of everyone who hopes to own an investment property or two as part of their overall financial strategy.

OSFI’s new rules are directed at how banks will be required to measure and classify mortgages within their overall risk metrics, which determine how much capital the institution needs to hold in reserve to backstop the amount of money they are lending. The new rules, which come into effect for 2026, will slightly increase how risky a mortgage secured by a rental property is considered when more than 50% of the income used to qualify the mortgage comes from the rental income generated from the property itself, and so the banks will have to hold a bit more capital in reserve when they make these types of loans.

We don’t expect these changes to have a material impact overall, compared to today, on whether or how people are able to qualify for rental property mortgages. However, because the banks will have to keep more capital in reserve, we do expect that the banks will begin charging a slightly higher interest rate for rental property mortgages compared to today (say, an extra 0.05% or so).

For some rental property borrowers on the margin, this slightly higher interest rate could be the make or break difference between qualifying to buy a property or not. But for most, it will just mean paying a slightly higher mortgage payment (which will eventually get passed onto their renters as slightly higher rents).