Buying a Home with an Income Suite
Good news reported by Canadian Mortgage Trends:
"The market for houses with basement apartments may get a little hotter. CMHC has announced it will allow 100% of the rental income from legal secondary suites to be used when qualifying for a mortgage. Currently it allows 50%.
The nation’s largest default insurer says the move is meant to “facilitate affordable housing choices for Canadians.”
“Secondary rental suites are recognized as a source of affordable housing offered at a cost that is often lower than those for apartments in purpose built rental buildings,” it adds. Secondary/basement suites also give lower-income Canadians the chance to live in single-family residential neighbourhoods.
The new rule takes effect September 28, 2015."
"Here’s what we’ve gathered thus far, with respect to what’s required to use 100% of suite income with CMHC:
The property must be owner-occupied.
The property being insured can have only two units (i.e., a duplex or a single home with a legal secondary suite).
Rental income cannot be used if the suite is “illegal/non-conforming” but “legal non-conforming” is okay. (Non-conforming means that the suite was grandfathered in before zoning/regulations restricted such units. You can check with the city to confirm if a suite is legal.)
The suite must be self-contained with its own entrance.
Property taxes and heat must be factored into the borrower’s debt ratios (which is currently not the case when using rent from legal secondary suites).
For existing units, there must be two-year history of rental income from the suite. The maximum rental income allowed for qualification is a two-year average of the unit’s rent.
For new units, a market rent appraisal can be accepted if an appropriate vacancy rate has been applied to the estimated rental income.
Mortgage applicants must “demonstrate a strong history of managing credit” with a minimum credit score of 680."
More information here.
This is good news to Comox Valley buyers that are considering a property with a mortgage-helping rental income. Higher density living is a positive thing for many reasons and is encouraged, for the most part, by our municipalities. It's great for walkability, helps local business, health, sustainability and a positive sense of community. It's also a great help to paying down your mortgage faster.
Currently, the Comox Valley boasts 66 listings with additional accommodation (though, they may not be legal...), ranging in price from $254,900 to $3,299,000. Here is a snap shot at a couple of listings currently available with separate living area:
3244 Piercy Avenue, Courtenay City
Gorgeous .29 acres in Courtenay backing onto the E&N Railway and Bill Moore Park. The backyard is fenced with two workshop areas, gardens and fruit trees! The 2400 square foot home features a wood vaulted ceiling in the living room, with large windows to see the mountains and a pellet stove for efficient heating and warm feelings. The master bedroom has an enormous walk-in closet and a 3 piece ensuite bathroom. The dining room is spacious enough to host celebrations for the whole family! The Kitchen serves lots of function, also with a mountain view, and access to decks. There is smaller front deck and a large back deck with stairs to the yard. The downstairs is laid out with space for extended family or roommates. Zoned R2. Room for RV parking. **REQUIRES UPDATES TO LEGALIZE SUITE
Once in lifetime location. 2 homes. Oceanfront Marine Drive across the road, enjoy the ocean and mountain glimpses from the covered porch of vintage inspired home. The main home has lovely antique windows with fir trim, fir wood floors with cherry border, front door with metal peekaboo window and other vintage features including garden nook. Updated laundry and bathroom with vessel sink. 3 bedroom home. Metal roofs on both homes. The second home is 441 square feet with one bedroom, updated bathroom, tucked at the back. The property is .34 of an acre with outside hot rock sauna, studio/garage off second home. Small orchard, lovely garden areas. Quiet country road, walk to down town Courtenay on an oceanfront nature path. Unique property. **2 HOMES
220 2nd Street, Old Orchard, Downtown Courtenay
ENJOY URBAN COTTAGE Style Living in Courtenay's Old Orchard neighbourhood. Using traditional Arts & Crafts styling, this new Home with it's Master on the main floor, will appeal to those who appreciate honest construction with a distinctive feel. 1637 Sqft, 3 bdrm/3 bath home has a detached 556 Sqft Carriage House with a fully finished 1 Bdrm suite. Perfect as a mortgage helper, guest accommodation, or In-law suite. Preserving and maintaining the heritage values & character of The Old Orchard & Area Local Plan, this Croonen Construction home has quality features including hardwood flooring, hot water on demand, gas forced air furnace & free standing gas F/P. Brick paver driveway leads to a large rear patio area and the Carriage House. Come and be a part of this beautiful setting just steps away from downtown Courtenay, the Puntledge & Courtenay Rivers, Lewis Park, or wherever your feet will take you.
Contact Jakob or Jasment to learn more about your options for homes with potential income suites. Click the addresses of the 3 listings to view more details, location and photos