🏠 Smart Money: How a Legal Rental Suite Can Make Your Dream Home Affordable

For many Canadians, bridging the gap between renting and owning feels impossible. The high cost of entry—the down payment, the closing costs—is often the biggest hurdle. But there is a smart, powerful strategy that makes homeownership a reality for thousands of buyers: buying a home with a legal, secondary rental suite.

How a legal suite can drastically improve your housing affordability and accelerate your financial goals

1. Lowering the Barrier to Entry: Qualifying for a Bigger Mortgage

A legal secondary suite doesn't just provide rental income after you move in; it helps you qualify for the mortgage in the first place.

When you apply for a mortgage, lenders can include a portion of the potential rental income—often 50% to 80%—as part of your total household income.

The Impact on Affordability

Scenario	Annual Household Income	Rental Income Included (70% of $1,500/mo)	Total Income Used for Qualification
No Suite	$100,000	$0	$100,000
With Legal Suite	$100,000	$12,600	$112,600

By boosting your effective income, you can qualify for a larger mortgage. This allows you to shop for a slightly higher-priced, higher-quality home that you wouldn't have been able to afford otherwise.

2. Reducing Your Monthly Carrying Costs (The "House Hack")

Once you move in, the rental income is a direct subsidy to your largest monthly expense: your mortgage payment. This is often called "house hacking."

If your monthly mortgage payment is $3,500 and you rent out your legal basement suite for $1,600, your effective cost of housing immediately drops to $1,900 per month.

This difference frees up significant cash flow that can be used for:

• Accelerating Mortgage Payments: Use the surplus to pay down your principal faster, saving you thousands in interest over the life of the loan

  
  

• Saving for Investments: Boost your RRSP or TFSA contributions

  
  

• Building an Emergency Fund: Create a stronger financial buffer.