Does a rental that doesn't cover its costs hurt my borrowing? (Ontario)

Yes, generally: in Ontario, as anywhere in Canada, a rental whose rent doesn't cover its costs reduces what you can borrow. For a CMHC-insured mortgage, a rental you already own counts on a net basis, and any shortfall after operating expenses, principal, interest, taxes and heat is deducted in the total debt service calculation. On uninsured mortgages, lenders generally treat a money-losing rental in a similar way, though methods vary and any amount is subject to lender approval.

How CMHC counts a rental you already own

For an insured mortgage, CMHC sets the rule for rental properties other than the one you are buying. CMHC uses a net approach: gross rent less operating expenses, with that property's principal, interest, taxes and heat either deducted from the rent or counted as a debt. Negative net rental income is deducted in the TDS (total debt service) calculation (source: Canada Mortgage and Housing Corporation, Rental Income, published May 2024, checked October 2026).

TDS is your housing costs plus your other debts, as a share of your gross income, and for insured mortgages it is capped at 44%, calculated at the qualifying rate (source: Canada Mortgage and Housing Corporation, checked October 2026). A shortfall on a rental works like any other monthly debt: it uses up room under that cap.

A worked example of a rental shortfall

Illustrative, not a quote. You own a rental condo that brings in $2,400 a month. Each month the condo costs:

• Operating expenses (insurance, repairs, condo fees): $400
• Mortgage principal and interest: $1,900
• Property tax: $350
• Heat: $100

1. Net: $2,400 − $400 − $1,900 − $350 − $100 = −$350 a month, or $4,200 a year.
2. That $350 counts against you in the TDS calculation, like a $350 car payment.
3. Inside a 44% TDS limit, carrying $350 a month needs about $795 a month of gross income ($350 ÷ 0.44), or about $9,500 a year.

So this rental uses up borrowing room that roughly $9,500 of your yearly income would otherwise support. If the same condo rented for $2,900, the net would be +$150 a month. A positive result generally helps rather than hurts.

How lenders treat a rental shortfall on an uninsured mortgage

For an uninsured mortgage, each bank, credit union or monoline lender uses its own method. Many count a share of the rent, either added to your income or offset against the property's costs.

Lenders also often check whether each rental's rent covers its own costs. Where the rent doesn't cover those costs, the property generally reduces what you can borrow elsewhere.

The share and the method vary, so the same shortfall can weigh more at one lender than at another (how much you can borrow against rental income).

Ways to shrink the shortfall on the mortgage side

• The payment. At renewal or in a refinance, a longer amortization (the total time to pay off the loan) lowers that rental's payment, where the lender allows it and you qualify (which mortgage suits a rental).
• The balance. A lump-sum prepayment within your prepayment privileges lowers the balance, and paying more than the privileges allow means a prepayment penalty (source: Financial Consumer Agency of Canada, checked October 2026).
• The lender's method. At maturity, you can switch to a lender whose method treats the property differently. There is no prepayment penalty then, but the switch is subject to that lender's approval.

What to do next

Put each property's rent and costs into the rental cash-flow tool to see which ones carry themselves. Then use our call-back form and we will show you how lenders would read the whole portfolio, subject to lender approval.