How does a lender treat existing rental income when I apply for a mortgage on an investment property?

Lenders generally do not count the full amount of rental income dollar-for-dollar toward what you can qualify for; instead, they typically apply their own formula or discount to the rental income before adding it to your qualifying income, and that treatment can vary meaningfully from one lender to another. Documented, existing rental income, supported by a lease and often a tax return showing the income already being reported, is usually viewed more favourably than projected income on a property you have not yet purchased.

Because these percentages, offset formulas, and documentation requirements are lender-specific and change over time, this is not something to estimate from a general rule; ask your mortgage professional how a specific lender will actually treat the rental income on your particular property before assuming a number for your qualifying calculation. This matters especially for multi-unit purchases, where the whole affordability picture can turn on how much of the rental income actually counts. Getting this confirmed early, before you are committed to a purchase, avoids an unpleasant surprise at the financing stage.