The Numbers CMHC Uses to Underwrite a Rental — and Why Yours Should Be at Least as Strict

Every investor has a spreadsheet, and every spreadsheet has assumptions in it that somebody chose because they made the deal work. The useful thing about the Canada Mortgage and Housing Corporation is that it chose its assumptions for the opposite reason. CMHC insures lenders against borrowers defaulting, so the numbers it underwrites to are the numbers a rental has to survive, not the numbers that flatter it. If a deal does not clear the insurer's test, it probably does not clear reality either — which makes those numbers the right floor for your own.

This guide sets out what CMHC actually requires, with the source for each figure, and then turns each rule into an assumption you can carry into your own underwriting. The rules are stated as CMHC states them; the rules of thumb are labelled as rules of thumb. Figures were checked in September 2026 and CMHC changes them, so the links at the bottom are the authority, not this page.

Part one: houses, condos and small multiplexes

For a mortgage that CMHC insures — which in practice means any purchase with less than 20% down, and the insured products for small rentals — the borrower has to pass two ratios. The gross debt service ratio (GDS) is the cost of carrying the home divided by gross annual income, and CMHC caps it at 39%. The total debt service ratio (TDS) adds every other debt payment to the numerator and is capped at 44%.

What goes into the GDS numerator is specific, and it is worth knowing because it is the list a lender will use whether you agree with it or not: principal and interest on the mortgage, property taxes, heating costs, and — for a condominium — 50% of the condo fees. Not the whole fee. Half, on the theory that part of it is building a reserve rather than paying a cost.

The mortgage payment in that calculation is not the payment you will make. It is the payment at the qualifying rate: the greater of your contract rate plus two percentage points, or 5.25%. A borrower offered 4.5% is tested at 6.5%. This is the rule people mean when they say "the stress test", and it applies to every term.

How CMHC counts the rent

Here is the number that matters most for an investor, and the one most spreadsheets get wrong. For a property that is part of the mortgage application, CMHC allows up to 50% of gross rental income to be added to the borrower's income, with the property's taxes and heat then excluded from the ratios. The other half of the rent is, in the insurer's eyes, spoken for — by vacancy, repairs, management and the months nothing goes right. The one exception is a legal secondary suite in an owner-occupied two-unit home, where CMHC will consider up to 100% of the suite's rent.

For a rental you will not live in, CMHC's Income Property product covers two-to-four-unit buildings: a minimum of 20% down, a property value under $1 million, an amortization of no more than 25 years, a credit score of at least 600 for one borrower, and the same 39/44 ratios at the same qualifying rate. Lenders may instead use a net rental income approach under their own guidelines, but the 50% rule is the published baseline.

Turning the rules into your own assumptions

The table below puts CMHC's requirements beside the assumption they imply for a private model — the kind of model the investor calculator on this site runs. The right column is judgement, not regulation; it is what the rule points at when you are not trying to qualify for insurance but trying not to lose money.

The rules of thumb that fill the gaps

CMHC's homeowner rules say nothing about vacancy, management or repairs — the 50% rent rule swallows all of them. For a private model you need them separately. These are conventions from lending and property management, not CMHC rules, and they are the defaults the calculator on this site starts from:

• Vacancy: 3–5% of rent. Four percent is about two empty weeks a year, which is what a well-priced unit in a normal market loses at turnover. Use CMHC's published vacancy rate for the zone if it is higher.
• Property management: 4–8% of collected rent, more for small buildings and furnished units. Charge it even if you plan to self-manage; your time is not free and the day you stop is not a day you get to choose.
• Repairs and maintenance: 5–10% of rent for a freehold house, 2–5% for a condo, where the fees already cover the building. An older rule puts it at 1% of the property's value a year for a house.
• A reserve for the big items — roof, furnace, appliances — on top of routine repairs, unless you have folded it into the line above deliberately.

Part two: buildings with five or more units

At five units the insurance changes entirely. CMHC's multi-unit programs are underwritten on the building's income rather than the borrower's, which is what makes them interesting: a building that carries itself can be financed at a loan-to-value and an amortization no house could get.

Under the standard multi-unit product (MLI Standard), CMHC insures loans of up to 85% of the purchase price or lending value. The building has to clear a debt coverage ratio — net operating income divided by annual mortgage payments — of at least 1.10 for a five- or six-unit purchase, 1.20 for a refinance of that size or for seven or more units on a term of ten years or longer, and 1.30 for seven or more units on a shorter term. Amortization runs up to 40 years for an existing building, and up to 50 years on qualifying new-construction rental projects under the current terms. Premiums in the 2017 reference guide ran from 1.75% of the loan at 65% loan-to-value to 4.50% at 85%; the July 14, 2025 update standardised the structure across products and moved the rates, so take the current schedule from CMHC's fee page rather than from here.

MLI Select is the same insurance with a points system. A project earns points for affordability (rents at or below 30% of median renter income, with more for a 20-year commitment), for energy efficiency, and for accessibility; 50 points is the minimum to qualify, and higher tiers unlock better terms — CMHC's own description is longer amortization, higher loan-to-value and reduced premiums "based on your client's level of commitment to affordability, accessibility and climate compatibility". At the top of the scale that means loan-to-value up to 95%. It applies to existing buildings as well as new construction, at five units or more. The exact terms at each tier have moved more than once since the program launched in 2022, so verify them on CMHC's page before you build a deal around them.

How to use a debt coverage ratio yourself

The DCR is the single most useful number in the multi-unit world and it takes one line to compute: net operating income for the year, divided by the year's mortgage payments. Net operating income is rent after vacancy, minus every operating cost — taxes, insurance, utilities you pay, repairs, management, reserves — and before the mortgage. A DCR of 1.20 means the building earns 20% more than it owes the lender; a DCR of 1.00 means one broken boiler puts you underwater.

• Run the DCR at CMHC's minimum for the building size, then again at 1.25 or better. The gap between the two is your margin.
• Sanity-check the expense side. Lenders expect operating costs on a multi-unit building to run 30–45% of gross rent; a rent roll that claims 20% is either brand new, missing a line, or lying.
• Value the building the way a lender will: NOI divided by the market cap rate, not price per door and not what the vendor's agent says the suites could rent for.

The calculator uses these

Every listing on this site carries an investor calculator that starts from the assumptions above — 20% down, vacancy at 4%, management and repairs as percentages you can change, land transfer tax and, on a pre-construction purchase, the HST an investor pays at closing. It is an estimate built from assumptions you can see and edit, not advice; but the assumptions are at least as strict as the insurer's, which is more than most spreadsheets can say. Try it on any listing.

For a building with five suites or more there is a second tool, the building underwriter, which works from the rent roll: net operating income, cap rate and price per suite, then the debt coverage test from part two and the first mortgage the income actually supports. Drop in a rent roll or an offering memorandum and it fills itself in, flagging what the document did not say.