# Rental income from rooms and qualifying for a mortgage



## Addy (Mar 12, 2010)

If we move to Kingston soon, I would like to live very very close to Queens for a variety of reasons. We can afford a small house and have little to no mortgage, average house with large mortgage or we could buy a large house and rent out rooms to help pay the extra mortgage.

Does anyone here know if lenders typically consider room rental as income? I have read rental income is considered 50% towards mortgage qualification generally only if there is a lease in place. However rooms in a private home do not fall under the landlord tenant act as we would share a kitchen, so although I could get the students to sign a lease, will lenders even consider it as income?

I have an email in to my mortgage broker but hope I can get a few opinions from anyone with first hand knowledge on this.

Thanks kindly.


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## Just a Guy (Mar 27, 2012)

Well, after dealing with tenants for a long time, I would never want to allow tenants into my house.

As for the banks, they will change what they consider income on a moments notice...I've even found talking to different people in the same branch on two different days changes the answer.


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## Addy (Mar 12, 2010)

We have rented to students in our home for over 15 years and enjoy it very very much. We also rent a detached house out and have wonderful tenants. Proper screening and knowing our target renters has served us well. 

As for your answers from the bank, we have never, and god willing, will never never deal with a bank for a mortgage. I know the lenders I have experience with do take rental income into consideration at a rate of 50%, I'm just not sure if rooms in an owners own house would apply the same way as an apartment/house or not.


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## marina628 (Dec 14, 2010)

They only take it if you have signed leases but not sure if you would want to do leases for people living in your home in case things turn badly.


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## Cdnwife (Sep 10, 2013)

Most of the houses around the University are student housing and from what I recall, the condition of these are likely to be rather rough. The area immediately surrounding the campus while close to the University is not something I would want to purchase as a family home. In my day they called it the ghetto and there was good reason for that. It has been a number of years since I have been through town, so perhaps things have changed, but for the most part houses in that area are in need of a lot of TLC.


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## Letran (Apr 7, 2014)

Cdnwife said:


> Most of the houses around the University are student housing and from what I recall, the condition of these are likely to be rather rough. The area immediately surrounding the campus while close to the University is not something I would want to purchase as a family home. In my day they called it the ghetto and there was good reason for that. It has been a number of years since I have been through town, so perhaps things have changed, but for the most part houses in that area are in need of a lot of TLC.


This is still the situation today. MOST of the houses near university is over 100 years old and are student rentals that badly needs TLC. But since the rooms do get rented every year (no matter the size or condition) and properties along the student ghetto also tend to appreciate every year there is very little incentive to spend money on these 100 year old relics.

I crossed Princess St. and bought a property there instead. 

The Govt of Canada considers room rental as income. And as far as I now if you have a lease agreement as marina said will also count as income as per mortgage application. The very least it will show in your NOA as income


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## Mortgage u/w (Feb 6, 2014)

I am a mortgage underwriter and can confirm that room rental income is not considered. The only rental income that is considered (at 50%) is for properties with regisitered units. So if you're home is only 1 unit but you rent out rooms, no rental income can be considered.


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## rikk (May 28, 2012)

Getting way off topic ... haven't been to Kingston for some time, but it seems to me the neighborhoods just west of Queens were really nice ... older homes sure, but well kept. If it was me, and now that I'm winding down, I'd go for a small well maintained home, no boarders, or an apartment (no students) if there are apartments in the area you're looking.


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## Ag Driver (Dec 13, 2012)

Mortgage u/w said:


> I am a mortgage underwriter and can confirm that room rental income is not considered. The only rental income that is considered (at 50%) is for properties with regisitered units. So if you're home is only 1 unit but you rent out rooms, no rental income can be considered.


+1 . I was looking at room rentals as income as well and this was found to be exactly the case .... when dealing with CMHC. If you put down north of 20% then your milage may vary as you do not have to follow CMHC rules.


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## Addy (Mar 12, 2010)

Mortgage u/w said:


> I am a mortgage underwriter and can confirm that room rental income is not considered. The only rental income that is considered (at 50%) is for properties with regisitered units. So if you're home is only 1 unit but you rent out rooms, no rental income can be considered.


Answers my question perfectly, thank you very much for replying!


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