A house with a basement apartment could give you a place to live and rent to help with the mortgage. Before making an offer, separate three questions: is the suite acceptable, how much rent will the lender recognize, and how will that rent enter the qualification calculation?
This walkthrough is for buying a home you will occupy while renting a separate unit in the same property. For other rental situations, read our rental income Add-Back and Offset guide.
1. Count the homes, then count the rentals
If you live upstairs and a tenant occupies one self-contained basement apartment, the property has two dwelling units in total. It has one rental unit. Those are different counts.
In MyMortgageMate, choose Owner-Occupied + Rental, then 1 rental unit under Rental units (excluding your home). Two rented apartments plus your own home would mean three total units and two rental units in that dropdown.
A finished basement or an extra bedroom does not by itself establish a separate dwelling. Ask for the suite's layout, municipal status and any permits or registrations. Have the lender confirm its property requirements. A lender's willingness to consider rent is separate from confirmation that a suite complies with local rules.
2. Establish a rent figure you can support
For an occupied apartment, collect the signed lease and ask what evidence of rent payments is required. For a vacant suite, ask whether the lender will accept market rent and what appraisal or rental report it needs. An advertised rent is a starting assumption until the lender accepts the evidence.
Documentation varies by program. Equitable's published rental criteria allow active leases or market rents, require self-contained units with a separate entrance, washroom and kitchen, and allow requests for additional documentation. See Equitable's rental criteria.
Keep the gross rent separate from the percentage accepted. A $2,000 monthly rent with 50% included means $1,000 enters the chosen rental calculation. It does not mean the tenant pays only $1,000.
3. Compare Add-Back and Offset using the same rent
Add-Back adds accepted rent to qualifying income. The property's eligible housing costs remain in the calculation. Offset first reduces eligible housing costs by accepted rent. Any surplus becomes qualifying income only if that lender's program permits it.
Here is a simplified monthly illustration with no other debts: household income of $8,000 before rent, eligible housing costs of $3,000, and gross rent of $2,000. Include 50%, so both methods use the same $1,000 of accepted rent.
| Method | Illustrative ratio calculation | Result |
|---|---|---|
| Add-Back | $3,000 ÷ ($8,000 + $1,000) | 33.33% |
| Offset | ($3,000 − $1,000) ÷ $8,000 | 25.00% |
Offset produces a lower ratio here because the rent reduces costs directly. With the same accepted rent and cost definitions, this is the usual direction when housing costs are below household income. It is not a promise that every Offset program produces the best approval outcome.
This illustration explains the method. It is not a complete lender GDS or TDS worksheet. Qualifying payments, eligible expenses, tax and heat treatment, other debts and program limits can change the result. Our GDS ratio explainer covers the underlying housing-cost ratio.
4. Confirm the program before choosing the percentage
CMHC's published framework allows up to 100% gross rental income for a two-unit owner-occupied property that is the subject of the application. Its owner-occupied three- or four-unit framework instead offers up to 50% gross rent or a net rental approach. The gross-rent approach adds rent to income and may exclude subject-property taxes and heat. These are conditional insurance guidelines, not automatic approval. Read CMHC's rental-income framework.
Lender labels alone do not choose the method. Equitable publishes 95% Add-Back for subject rentals and 95% Offset for non-subject rentals. MCAN's March 2026 Discover Alternative sheet lists 95% Add-Back for subject owner-occupied rentals, subject to its lease, suite and insurance requirements, and 90% Offset for non-subject properties. Equitable's published methods and MCAN's current rental sheet show why the exact program matters.
5. Build your calculator scenario
- Enter employment or other qualifying income without adding the same suite rent again.
- Choose Owner-Occupied + Rental and the number of rental units excluding your own home.
- Enter the supported amount under Gross rent (monthly).
- Set Rent included and Rental method to the assumptions confirmed for the proposed program.
- Review the result with your broker and keep a separate scenario with no rent to understand your household's exposure.
Use the residential mortgage calculator to compare assumptions. Selecting a method or percentage does not verify suite legality, validate a lease or automatically apply every insurer and lender policy.
Finally, make a household budget for vacancy, repairs, insurance, utilities and rental operating costs. Qualification rent is a lending calculation, while actual rent must support real bills. Before relying on basement income in an offer, have your broker confirm the property, rent evidence and complete financing conditions.
Put the figures into a scenario
Use the appropriate assumptions, compare the results and save a summary for your file.
Open the Residential Mortgage Calculator →Sources and review
References checked October 14, 2026. Examples are illustrative; confirm the lender, insurer and program requirements for your situation.