I don’t think it’s an exaggeration to say that a new bill announced by the Office of the Superintendent of Financial Institutions (OSFI), the federal government agency that regulates Canadian banks, could mark the end of real estate investing in Canada as we know it. Significant changes are coming in 2026 to the way Canadian banks decide who qualifies for a mortgage. Some rules are already in place, some are finalized and rolling out next year, and others are still being discussed. Here’s what you need to know and how these changes may affect you.
What’s Already Happening
1. Caps on “big mortgages” relative to income
Since earlier this year, banks have had to monitor how many of their new uninsured mortgages (those with a down payment of 20% or more) exceed 4.5 times the borrower’s income.
This isn’t a personal cap. You can still qualify for a mortgage larger than 4.5× your income. But because each bank can only do so many of these loans every quarter, they may become more selective, especially near quarter-end when they’re close to their limits.
2. The “stress test” remains in place
Both insured (less than 20% down) and uninsured (20%+ down) mortgages are subject to the stress test. That means you must qualify at the greater of your contract rate plus 2%, or 5.25%.
For example, if your mortgage rate is 5%, the bank tests you at 7%.
For insured mortgages, this rule comes from the federal Department of Finance. For uninsured mortgages, OSFI (the banking regulator) enforces the same standard.
The one exception is when you switch your mortgage at renewal to another lender without changing the loan amount or amortization. In that case, most lenders will not apply the stress test.
So far, nothing here is changing. But because banks must now also manage their share of “big mortgages” compared to income, OSFI has said it will revisit whether the stress test is still necessary once those rules have been in place for a while. This means we could see the stress test revamped or removed altogether.
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What’s Changing in 2026
1. Rental and commercial property mortgages will face more scrutiny
From 2026, many mortgages will be classified as “income-producing” if more than half of the income used to qualify comes from the property’s own rent.
For residential rentals, this is a major shift. Most rental mortgages today rely on a mix of personal and rental income. Lenders use different formulas: some “add back” a portion of the rent to your income, others “offset” rent against expenses. In most cases, they use at least 50% of the rent. Under the new rules, that will push many rental mortgages into the higher-risk category. These loans will require banks to hold more capital, which usually means higher interest rates, bigger down payments, and stricter approvals.
Commercial properties were already treated as riskier, since they are almost entirely underwritten on the rental income of the property itself. What changes in 2026 is that residential rentals are being pulled into the same treatment.
In short: commercial mortgages were already harder to get, and now residential rentals are catching up to that stricter standard. For dentists, that means both rental and commercial purchases will be more challenging going forward, with commercial properties still the toughest of all.
2. No more “double-counting” income
This is the single biggest change for most borrowers.
Starting in 2026, once your income has been used to qualify for one mortgage, you can’t use that same income again for another. In the past, banks considered your full income each time, along with debts and rental income, and then tested your debt-to-income ratio. Going forward, income already committed to an existing mortgage will be off-limits. How regulators plan to track and enforce this is still unclear, but current guidance suggests that once income is used to qualify for one property, it cannot be used again for another.
For example, imagine you earn $300,000 per year. If $200,000 of that income is needed to support your first property (Property A), only the remaining $100,000 would be available to qualify for your next purchase (Property B). In that case, only your leftover $100,000 plus the rent from Property B could be applied. This already makes qualifying very difficult. Now let’s say you manage to get approved for Property B. When you move on to Property C, none of your original $300,000 of income or the rental income from Properties A or B can be counted. Only the rental income from Property C would qualify.
In my 10 years working on mortgage files across Canada, from Victoria, BC to St. John’s, NL, and everywhere in between, I have never seen a single property that generates enough rental income to qualify for a mortgage with only a 20% down payment and no additional borrower income. If applied as written, this rule may effectively make it impossible to own more than one or two rental properties, even for dentists, or at the very least require down payments far greater than the current 20% minimum.
At face value, this change may not end up as catastrophic as it sounds, since the rules are still evolving and further guidance is expected. If regulators decide that previously used income cannot be counted, then previously counted debts should also be excluded. That would make the framework more balanced. However, if income cannot be reused while debts continue to be included, this would essentially mean double-counting debt while only counting income once. In that scenario, very few individuals would qualify for new mortgages outside of private or non-traditional lenders.
The result would likely be a real estate market dominated by primary residence buyers, while small-scale investors with fewer than five properties would largely disappear. On the flip side, institutional investors, pension funds, and large corporations with pooled capital could step in and purchase properties outright, bypassing mortgages altogether.
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Why You Should Care
These new rules don’t impact individuals looking to buy a home they are going to live in. But if you want to purchase rental or investment properties, these changes will make it much harder to build a rental portfolio, particularly in BC and Ontario where high prices already limit affordability. The new income-producing test, combined with the no “double-counting” rule, will push most rental properties into the higher-risk category, which means higher rates, stricter terms, and larger down payments.
If you want to own your practice space, buying the building or suite for your clinic is different. In these cases, banks can see that your practice generates enough revenue to pay rent to your property company, which in turn covers the mortgage. Because of this, these changes shouldn’t cause major issues for most dentists purchasing their own practice premises, even with 100% financing. That said, banks will look more closely at lease agreements, financial projections, and sustainability. It’s possible that some locations may require a down payment where previously 100% financing was allowed.
The Bottom Line
Starting in 2026, dentists (and all Canadians) will see:
• Rental mortgages treated more harshly
• No ability to reuse the same income across multiple property purchases
• Banks monitoring their share of “big mortgages” compared to income
These changes don’t mean you can’t borrow or qualify for a mortgage for a rental property. But they will make it much more difficult to scale a rental portfolio and will add more scrutiny to both residential and commercial purchases. Non-OSFI lenders such as credit unions and private lenders will likely play a bigger role, making it vital to work with multiple lenders or professionals who can access them. The rules are still evolving, and as always, we’ll find creative solutions for our clients. But the future of real estate investing in Canada is looking far tougher under these proposals.
About the author:
Gurtej Varn is a wealth advisor specializing in serving early to mid-career dentists. His firm, White Coat Financial Inc., offers a full suite of services – investments, insurance, mortgages, tax planning, and financial advice.