OSFI’s Rental Mortgage Changes

What B.C. Landlords Should Expect by February 2026
Starting in early 2026, banks must apply new capital rules to mortgages that rely mainly on rental income to be repaid. That can raise lenders’ costs and, in turn, may mean tighter terms or slightly higher rates on certain rental loans. The rules begin phasing in on January 1, 2026 (depending on a lender’s fiscal year) and will be felt through renewals and purchases in Q1 2026—including February. 

What’s changing?
OSFI (Canada’s banking regulator) has updated its Capital Adequacy Requirements (CAR) for 2026. Lenders must classify some mortgages as income-producing residential real estate (IPRRE) when the loan’s repayment materially depends on cash flow from the property (i.e., rent). If more than 50% of the income used to qualify comes from the subject property’s rental cash flow, that loan is treated as income-producing and carries higher risk weights than typical owner-occupied mortgages. 
Under these rules, income-producing residential mortgages get higher capital charges at a given loan-to-value (LTV) than non-income-producing ones. 

Why this matters

• Renewals may feel different. If your rental’s debt service depends primarily on rent from that property, your lender may apply different internal pricing or conditions because they must hold more capital against that loan type. (These are capital rules—not a change to the borrower “stress test”, but they can still influence lender pricing/terms.) 
• No “double counting” of income. OSFI has clarified that lenders shouldn’t double-count income when assessing investment-oriented mortgages, tightening how some portfolio investors qualify across multiple properties. 
• B.C. context: In 2026, the allowable rent increase cap is 2.3%. That limits how much gross rent can rise to offset higher financing costs, which matters for debt-service metrics.

Who is most affected?

• New purchasers of a rental where >50% of the qualifying income is the property’s own rent.
• Renewing investors with tight debt-service ratios (DSR/DSCR), high LTVs, or variable-rate exposure.
• Multi-property owners who historically relied on surplus rental income from other doors to qualify; lender approaches to portfolio income are being tightened in practice. 

What you can do between now and February

1. Start renewal conversations 120 days out. Ask your lender or broker whether your file will be treated as income-producing under the new capital guidance and how that affects pricing or conditions. (Implementation is lender-side but begins January 2026.) 
2. Strengthen the file:
   Update leases, show full rent ledgers and proof of deposits.
   Reduce non-property debts where possible to improve total debt service.
   Consider modest LTV reductions if feasible.
3. Stabilize cash flow: Tighten vacancy/turnover, review utilities, and ensure market-level rents on turnover (within B.C. rules). Remember the 2.3% cap on 2026 increases for existing tenancies.
4. Compare options: Ask your broker how different lenders are interpreting the 50% “materially dependent” test and what that means for fixed vs. variable terms in Q1.

For tenants: what to expect
These changes target bank capital, not rent rules. B.C.’s 2026 rent cap remains 2.3% for eligible tenancies. If you receive a rent-increase notice, B.C. requires three full months’ notice and the approved form.

How Cityplex can help
Cityplex keeps your investment lender-ready:

• Clean, auditable rent ledgers and on-time collections to support debt-service assessments.
• Vacancy reduction and market-aligned pricing (within B.C. rules) to stabilize NOI.
• Turnover and maintenance planning that improves DSCR before renewal.

Sources
OSFI Backgrounder & Effective Dates; CAR 2026 (effective Jan 1, 2026 for most banks). Link

CAR 2026 details on income-producing residential real estate, 50% test & risk weights. Link

OSFI/industry clarification on avoiding double-counting income for investment mortgages. Link

B.C. 2026 allowable rent increase (2.3%) and notice rules. Link