OSFI's New Mortgage Rule: What Investors Must Know (No, It's Not a Ban)
If you're a Canadian real estate investor, you've probably heard whispers about OSFI’s latest mortgage guideline—and what it means for financing investment properties. In this post, we break down exactly what changed, why lenders are adjusting, and how it could impact your next purchase. Spoiler: it’s not about qualifying differently, but how banks classify your loan behind the scenes.
Who is OSFI?
OSFI (Office of the Superintendent of Financial Institutions) is Canada’s federal regulator for banks, insurers, and lenders. Their mandate is to ensure the stability of the financial system by monitoring risk—including how banks underwrite mortgages.
What Did OSFI Actually Change?
OSFI recently clarified that lenders must avoid “income re-use” when qualifying borrowers for multiple properties. More importantly, they’re now requiring lenders to classify certain mortgages as “income-producing” if more than 50% of the qualifying income comes from the subject property’s rent.
This classification affects the bank’s capital reserves—not your initial application.
Why This Matters to Lenders
When a mortgage is labelled “income-producing,” OSFI requires the bank to hold more capital in reserve. This extra capital reduces lending capacity and can squeeze profitability. To offset that, lenders may:
- Introduce slightly higher interest rates for rental properties
- Apply stricter criteria for investors with multiple mortgages
While many lenders already price rental loans differently, some major banks—like RBC—may begin refining their pricing models in response.
What Does This Mean for Real Estate Investors?
For now, most investors won’t see major changes in how they qualify. Mortgage rules remain the same at the point of application. However, over the coming months (beginning in 2026), you might notice:
- Moderately higher rates on rental mortgages compared to primary residence loans
- Reduced flexibility from some lenders when structuring multi-property financing
Key takeaway: This shift is about bank risk management; however, it may become a new barrier to entry for smaller investors.
Bottom Line for Canadian Investors
OSFI isn’t targeting real estate investors—they’re ensuring banks remain resilient amid growing investment property portfolios nationwide. However, because banks will have to keep more capital in reserve, it is expected that they will begin charging a slightly higher interest rate for rental property mortgages compared to today.
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 on to their renters as slightly higher rents).
What Should Investors Do Next?
- Consult your mortgage broker to identify lenders still offering competitive rental property rates.
- Review your investment strategy with your realtor to align financing with your long-term goals.
- Stay informed—regulatory updates can influence lender behaviour over time.
Ready to navigate financing in today’s market?
I partner with experienced mortgage specialists who understand investment real estate—and can help you secure the right financing for your next property. Reach out today for a tailored introduction!
