DSCR in the Canadian market
DSCR is net operating income divided by annual debt service — whether the property earns enough to cover its own mortgage. In Canada this ratio is under real pressure: with national multifamily cap rates around 4.4% and Toronto/Vancouver closer to 3.5–4.5%, many urban rentals cannot reach the 1.20–1.25 that lenders prefer, which is why investors often need larger down payments than the 20% minimum to make a deal pencil. See the full city-by-city spread, Toronto and Vancouver included, in cap rates by city.
For 5+ unit properties, CMHC's MLI Select program is the notable exception: its points-based tiers (affordability, energy efficiency, accessibility) allow DSCR minimums as low as 1.10, LTV up to 95%, and amortizations up to 50 years — dramatically improving the ratio. For 1–4 unit conventional deals, your levers are a smaller loan, longer amortization, higher rent, or lower expenses. Pair this with the cap rate and cash-on-cash calculators.
Canada has no single, government-published DSCR minimum for ordinary 1-4 unit rental mortgages — that number is set lender-by-lender, and no VERIFIED public source states a universal figure. The one place a DSCR floor is officially published is CMHC's MLI Select program for 5+ unit multi-residential loans, where every points tier — 50, 70, and 100 points — carries the same published minimum DCR of 1.10. Below that program, run your deal against the OSFI minimum qualifying rate to see whether it clears the stress test lenders actually apply.
The only published DSCR floor in Canada: CMHC MLI Select
CMHC's MLI Select program is the only place a Canadian DSCR (CMHC calls it DCR, debt coverage ratio) minimum is published by a regulator or insurer, and it applies to multi-unit residential properties, not single rental homes or small 1-4 unit buildings. The program scores a deal on points across three categories — affordability, energy efficiency/GHG reductions, and accessibility — and the minimum DCR is 1.10 at every points tier the program publishes.
| Minimum points | Max LTV | Max amortization | Minimum DCR | Recourse |
|---|---|---|---|---|
| 50 | 85% | 40 years | 1.10 | Recourse available |
| 70 | 95% | 45 years | 1.10 | — |
| 100 | up to 95% | 50 years | 1.10 | Limited-recourse option available |
Source: CMHC MLI Select programme page, fetched 2026-09-21. Points are earned across Affordability (up to 100 pts existing / 50 pts new construction), Energy Efficiency/GHG Reductions (up to 100 pts), and Accessibility (up to 40 pts).
What CMHC's own page does NOT state is a specific premium percentage or discount tied to each tier — figures like "5.18% premium" or "30% discount" that circulate on mortgage-broker sites could not be confirmed against CMHC's MLI Select page itself. Treat any specific premium-rate number you see elsewhere as unverified until you can trace it to CMHC's own premium schedule, and confirm current pricing directly with a CMHC-approved lender before using it in a proforma.
1-4 unit rentals: no published DSCR floor exists
Most individual investors buying a single rental house or a duplex are not in MLI Select's multi-unit-insurance world at all — that financing is a conventional, uninsured mortgage. No VERIFIED government or CMHC source in this lane's registry states a minimum DSCR for that segment. Private and alternative lenders who market "DSCR loan" products in Canada set their own thresholds, and this page does not publish a number for them because no official source confirms one — if a lender quotes you a minimum, treat it as that lender's own underwriting policy, not a regulatory floor.
What IS regulated for a conventional (uninsured) 1-4 unit rental mortgage is the qualifying rate itself. Under OSFI's Guideline B-20, every federally regulated lender must qualify an uninsured mortgage at the greater of the contract rate plus a Superintendent-set buffer, or a Superintendent-set floor — currently the greater of contract rate + 2% or a 5.25% floor. That stress-tested rate, not your contract rate, is what determines the debt service a lender actually tests your NOI against — run the calculator above at that higher rate to see your real qualifying DSCR, not just your at-contract-rate ratio.
Rate context for today's debt-service math
Two current data points from the Bank of Canada put real numbers behind the stress test. The chartered-bank prime lending rate was 4.45% as of the observations dated September 2, 9, and 16, 2026 (unchanged across those weeks), and the posted 5-year conventional mortgage rate — the banks' published rate, materially higher than typical discounted contract rates — was 6.09% over the same three weeks. Neither figure is what you'll necessarily be offered; they're reference points for how far a contract rate sits below what's posted, and for sanity-checking a lender's stress-test math.
How DSCR differs from the ratios on an insured, owner-occupied loan
It's easy to conflate DSCR with the ratios CMHC publishes for insured owner-occupied mortgages, but they test different things. For CMHC-insured homeowner loans, CMHC's own qualification page states GDS should not exceed 39% and TDS should not exceed 44% of the borrower's gross household income — a personal-income test, not a property-income test. DSCR, by contrast, is evaluated purely on the property's own NOI against its own debt service, independent of the borrower's paycheque.
One CMHC rule worth knowing if your rental income calculation includes a condo: for CMHC-insured mortgages specifically, 50% of monthly condominium fees must be included in GDS and TDS calculations (100% of site/ground rent applies instead for leasehold or chattel properties). That specific 50% figure is a GDS/TDS rule for insured, owner-occupied lending — it is not stated by CMHC as a DSCR/NOI adjustment, so don't assume it carries over to how a DSCR lender treats condo fees in your operating expenses without confirming with that lender directly.
Capital cost allowance lowers your tax bill, not your DSCR
DSCR is built from net operating income — actual cash rent in, actual cash operating costs out. It's easy to confuse that with the taxable rental income CRA calculates, because the two numbers diverge on exactly one line: capital cost allowance (CCA). Per CRA's rental income guidance, a rental building falls into CCA Class 1 (4% declining-balance) or Classes 3, 6, 31 or 32 depending on construction material and acquisition date, and other rental property like appliances or equipment falls into Class 8 (20%). None of that is a cash outflow — it's a bookkeeping deduction against taxable income, so it never belongs in the NOI a lender runs through your DSCR.
Two mechanics worth knowing even though they sit outside DSCR itself: the half-year rule limits the first-year CCA claim to one-half of net additions to a class in the year you acquire the property, and on disposal CRA requires either a recapture added to income (if sale proceeds exceed the remaining undepreciated capital cost) or a terminal loss deducted (if proceeds are lower). Both affect your tax bill at acquisition and at sale — neither one changes the NOI a lender is testing your debt service against today.
Methodology
The MLI Select table reproduces CMHC's own published points/LTV/amortization/DCR tiers exactly as stated on its programme page. The worked example applies the calculator's own DSCR formula (NOI ÷ annual debt service) to CMHC's published 1.10 floor. Rate context (prime, posted 5-year, OSFI's minimum qualifying rate) is drawn directly from Bank of Canada Valet data and OSFI as published on 2026-09-21, not estimated — these are point-in-time observations and will move.
Sources
- CMHC — MLI Select programme page — accessed 2026-09-21
- OSFI — Minimum qualifying rate for uninsured mortgages — accessed 2026-09-21
- OSFI — Guideline B-20, Residential Mortgage Underwriting Practices and Procedures — accessed 2026-09-21
- Bank of Canada — Valet API, Prime rate (V80691311) — accessed 2026-09-21
- Bank of Canada — Valet API, Conventional mortgage 5-year posted rate (V80691335) — accessed 2026-09-21
- CMHC — General requirements to qualify for homeowner mortgage loan insurance — accessed 2026-09-21
- CMHC — Calculating GDS and TDS — accessed 2026-09-21
- CRA — Rental income (T4036): Capital Cost Allowance for rental property — accessed 2026-09-21
DSCR minimums in Canada
| Financing type | Typical DSCR minimum |
|---|---|
| Conventional 1–4 unit investment | 1.20–1.25 |
| CMHC MLI Select (5+ units, 50 pts) | As low as 1.10 |
| CMHC MLI Select (100 pts) | Up to 95% LTV, 50-yr amortization |
MLI Select awards points for affordability, energy efficiency, and accessibility (min 50). Longer amortization raises DSCR but adds a premium surcharge (+0.25% per 5 years beyond 25).
Frequently asked questions
What is a DSCR loan?
A DSCR (debt service coverage ratio) loan qualifies you on the property's rental income rather than your personal income — no tax returns or pay stubs needed. The lender simply checks whether the property's net operating income comfortably covers the mortgage payment. That makes DSCR loans popular with self-employed investors and anyone scaling a portfolio past what conventional debt-to-income limits allow.
What DSCR do lenders require?
Most lenders require a minimum DSCR of 1.20–1.25 for the best terms, meaning the property earns 20–25% more than its debt payment. Some programs accept 1.0 — break-even, where rent exactly covers the mortgage — at a higher interest rate. A handful go below 1.0 (as low as 0.75) with compensating factors such as a larger down payment, strong credit, or cash reserves, but pricing is premium.
How is DSCR calculated?
DSCR = net operating income ÷ annual debt service. NOI is your gross rent minus vacancy and operating expenses (taxes, insurance, maintenance, management) but not the mortgage. Annual debt service is your total yearly mortgage payments. A DSCR of 1.25 on C$30,000 of debt service means the property produces C$37,500 in NOI.
How can I improve a DSCR that's too low?
You have four levers: borrow less (a smaller loan lowers debt service), stretch the amortization (a longer term lowers the annual payment), raise the rent, or cut operating expenses. Reducing the loan amount is the most direct fix — this calculator shows the maximum loan that still meets your target DSCR at the same rate and term.
Does DSCR use NOI or PITIA?
It depends on the lender. Many residential DSCR programs compute the ratio as rent divided by PITIA (principal, interest, taxes, insurance, and association dues) rather than using full NOI, which excludes maintenance and management. That distinction can move your ratio meaningfully, so always confirm how your specific lender defines the formula before assuming you qualify.