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Your client wants to keep their current home as a rental and buy a new one — but their bank only counts 50% of the rental income. There's a better way. Scott Dillingham reveals the rental worksheet strategy that lets clients qualify based on 100% of actual rental income, unlocking significantly higher purchase prices.
The rental worksheet approach fundamentally changes how lenders calculate debt service ratios. Rather than treating half the rental income as a loss on paper, these programs allow brokers to input actual rental figures and subtract real expenses, resulting in a much smaller—or even positive—cash flow calculation. This difference can mean tens of thousands of dollars in additional purchasing power for qualified borrowers. Scott shares a compelling case study where a client was initially approved for only $250,000 through their bank, but after applying the rental worksheet program, qualified for $450,000—nearly double the original amount.
This strategy is becoming increasingly relevant as Canadian real estate markets experience longer selling times and more homeowners choose to hold onto their properties as investments rather than sell. With the ability to purchase a new primary residence with as little as 5% down payment while keeping an existing property as a rental, homeowners can build wealth through real estate without depleting their current equity position. The key distinction is that this program specifically applies when purchasing an owner-occupied primary residence while converting an existing home to rental property—a scenario that major banks simply cannot accommodate with competitive qualification amounts.
Scott emphasizes that these rental worksheet programs are not available through traditional banks and require working with mortgage professionals who have access to specialized lenders. For realtors, understanding this program creates a significant opportunity to help clients who might otherwise be stuck renting or unable to find suitable properties within their bank-approved budget. The episode underscores the value of seeking second opinions on mortgage pre-approvals, particularly when clients are navigating the transition from homeowner to landlord-investor.
Key Takeaways
- Traditional lenders use only 50% of rental income when qualifying borrowers who are converting their home to a rental property, creating an artificial debt shortfall that limits purchasing power
- Rental worksheet programs available through mortgage brokers can use up to 100% of rental income, potentially doubling qualification amounts compared to bank approvals
- Homeowners can purchase a new primary residence with as little as 5% down payment while keeping their existing property as a rental investment
- A real case study showed a client's approval jump from $250,000 at a bank to $450,000 using the rental worksheet program—an $200,000 increase in purchasing power
- This program is specifically designed for primary residence purchases where the borrower is renting out their previous home, not available through major banks
- Realtors can significantly increase deal closings by referring clients for second-opinion pre-approvals when rental conversion is involved
Links to Show References
- LendCity Mortgages: lendcity.ca
- Contact Scott Dillingham: scott@lendcity.ca
- Close More Deals Podcast: Available on major podcast platforms
- (00:00) - – Introduction to the Rental Worksheet Qualification Program
- (00:58) - – How Traditional Lenders Calculate Rental Income at 50%
- (01:45) - – Understanding the Rental Worksheet Advantage
- (02:22) - – Real Case Study: $250K Bank Approval vs $450K Broker Approval
- (03:15) - – Why This Program Isn't Available at Banks
- (03:42) - – Call to Action for Realtors
Show Resources:
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