Short answer
Possibly, but proposed rent is not guaranteed income. The lender may require approved plans, a market-rent appraisal, completion conditions and an acceptable suite before using any amount. The percentage and calculation differ sharply across A, alternative/B and insured files.
The client problem behind the question
The homeowner needs the future tenant income both to fund the suite and to qualify for the larger mortgage, creating a circular problem.
What the official guidance establishes
CMHC Refinance is an insured product designed to help eligible homeowners build self-contained secondary suites. It is project-specific and subject to borrower, occupancy, property and construction requirements.
Where the answer can change
CMHC guidance applies to CMHC-insured submissions. Conventional A lenders may use an add-back or offset under their own rules. Alternative/B lenders may use a more generous offset on some files, but property, lease and market-rent evidence still matter. Private lenders focus more on equity and exit strategy.
A practical Ontario example
Illustration only: A homeowner proposes a legal suite renting for $2,200. An A lender uses only part of the rent; an alternative lender may use a stronger offset but charges more. The best option depends on the total payment and a realistic route back to A lending after completion.
What to do before committing
Confirm permits, plans, cost, market rent, vacancy allowance, property taxes, insurance and completion timeline. Compare the full cost and exit plan, not only which lender uses the largest rent figure.
Questions Rajiv would ask
- What deadline, condition or closing problem must be solved?
- Which facts are confirmed by original documents and which are still assumptions?
- Which law, insurer rule or lender policy applies to this exact transaction?
- What happens to the cash requirement and monthly payment if the first option fails?
- What is the practical route back to lower-cost financing, if temporary financing is used?
Rajiv’s broker perspective
I would match the financing to the contractor schedule, not only to the finished value. The practical review includes how much cash is needed before each draw, whether permits and rent are supportable, and what happens if the project costs more or takes longer. A, alternative/B, MIC and private options can each work, but the exit and total cost must be clear before construction begins.
Related: Mortgage declined? Start here · Mortgage Knowledge Centre · Real Estate Centre · Updates & Rules Centre
Would a second opinion help before you commit?
Send Rajiv the property, deadline, financing concern and the documents already available. He can identify the missing questions, compare practical mortgage routes and explain the next step in plain language.