The Market Is Changing: What Canada’s New Mortgage Rules Mean for Investors and Homebuyers

Canada’s housing market is entering a new phase — one that will bring significant changes for real estate investors and open new doors for first-time buyers.

Starting in 2026, new mortgage qualification rules will make it more challenging for investors to finance properties using personal income. At the same time, the federal government has extended the Prohibition on the Purchase of Residential Property by Non-Canadians Act, continuing to restrict foreign buyers from purchasing residential real estate.

Together, these changes are reshaping the market — reducing competition from foreign and domestic investors and creating more opportunities for Canadian buyers.

The Foreign Buyers Ban: Reducing Speculation, Increasing Opportunity

The Prohibition on the Purchase of Residential Property by Non-Canadians Act, also known as the Foreign Buyers Ban, was first introduced in 2023 and has recently been extended.

The goal of this legislation is to reduce speculative foreign demand and make housing more accessible to Canadians.

Since its introduction, we’ve seen:

• Fewer foreign transactions in markets like Vancouver and Toronto
• Softer prices in areas once driven by international demand
• More opportunities for local and first-time buyers to enter the market

While this has eased some of the pressure in certain price segments, it’s also shifted competition. Today, the real challenge lies between domestic investors and homebuyers — particularly in desirable communities like the Tri-Cities.

OSFI’s New Mortgage Rules Coming in 2026

The Office of the Superintendent of Financial Institutions (OSFI) is introducing stricter lending rules that will impact how investors qualify for mortgages. These changes aim to ensure more sustainable borrowing practices but will also tighten investor eligibility.

Here’s what’s changing:

• No more double-counting personal income: Income used to qualify for one property can’t be reused for another.
• Each property must qualify on its own: Lenders will assess a property’s debt service based on rental income, not the borrower’s personal earnings.
• Refinancing will be tougher: Accessing equity will depend on whether each property independently qualifies.
• Selling may require flexibility: With fewer investors qualifying for financing, sellers might consider creative solutions like Vendor Take-Back (VTB) mortgages to attract buyers.

Why Prices Could Stay Softer

With fewer investors qualifying for new purchases, we could see a smaller pool of active buyers in 2026. That may help keep prices balanced — particularly for condos and smaller investment properties — creating a more stable environment for primary homebuyers.

For investors, this means being strategic: focus on properties that generate strong cash flow and can stand on their own financially.

A Window for First-Time Homebuyers

For years, first-time buyers have struggled to compete with investors for entry-level homes. These upcoming mortgage changes could finally level the playing field.

With fewer investors active in the market, entry-level homes and condos may remain more attainable. Combined with existing government programs — like first-time buyer tax rebates, shared-equity initiatives, and insured mortgages — this could be the opportunity many Canadians have been waiting for.

The 5% Down Rental Opportunity

There’s still some good news for investors. A few lenders continue to offer rental property financing with as little as 5% down.

The key difference is how approval works — it’s now based primarily on the property’s rental income, not personal salary.

That means investors can still grow their portfolios, but the math has to make sense. Cash flow is king, and properties need to perform on their own merit.

Acting before the new OSFI framework takes full effect may provide the most flexibility, while sellers who can demonstrate strong rental potential will have an advantage when attracting qualified buyers.

Navigating What’s Ahead

The combination of new investor mortgage rules and the extended foreign buyers ban marks a clear turning point for Canada’s housing market.

For investors, success will come from adapting — focusing on cash-flow-positive properties and leveraging creative financing when needed.

For first-time buyers, this shift could finally open the door to homeownership in markets that were previously out of reach.

The bottom line: the landscape is changing, but with the right strategy and preparation, there are still strong opportunities ahead — whether you’re planning to buy, sell, or invest in the Tri-Cities.