Understanding Rental Offset and Choosing the Right Lender for Your Investment Needs
Josh Perez • December 15, 2024
As a mortgage broker, I often hear this question: “Which lender has the best rental offset?” It’s a valid concern for investors, but here’s the truth—it doesn’t really matter.
Let me explain why.
"The best rental offset isn’t necessarily the best lender for your investment needs. It only matters after reviewing your application, documents, property specifics, and what you're hoping to accomplish."
The Best Rental Offset Isn’t Always the Best Option
Imagine this scenario:
- Lender A uses 100% of rental income for calculations.
- Lender B uses 50% of rental income.
On the surface, Lender A seems better, right? But here’s the catch:
- Lender A deducts only the mortgage payment.
- Lender B, meanwhile, deducts the mortgage payment, property taxes, property management fees, utilities, and insurance.
Now which one works better for you? It depends entirely on the specifics of your situation.
Interest Rates Don’t Tell the Whole Story
Here’s another example:
- Lender A offers a 5.75% interest rate and verifies rental income based on what you reported on your tax return. They qualify you for a $700,000 mortgage.
- Lender B offers a 6.5% interest rate but verifies rental income using current leases or market rents from an appraiser. They qualify you for an $850,000 mortgage.
Which lender is better? Again, it depends on your goals, financial profile, and the property specifics.
Tailoring the Strategy to Your Goals
Your investment needs are unique, and the “best” lender depends on what you’re trying to accomplish. Whether it’s:
- Purchasing your first rental property or your tenth,
- Refinancing to pull the maximum equity,
- Setting up a home equity line of credit (HELOC),
- Minimizing your down payment for the next property,
The right strategy involves a lot more than comparing rental offsets or interest rates. It requires a comprehensive review of your application, documents, and long-term goals.
A Call to My Fellow Mortgage Brokers
Let’s be real: reciting rates and offsets without understanding an investor’s full picture is lazy. It’s not just a disservice to investors—it’s a disservice to the value we, as brokers, are supposed to provide. Every situation is unique, and our role is to guide investors toward the solutions that truly fit their goals and strategies.
Final Thoughts
The “best” rental offset isn’t necessarily the best choice for your investment journey. It’s about aligning your financing with your broader investment goals and ensuring that the lender you choose can support your strategy, whether it’s growing your portfolio or maximizing your returns.
If you’re ready to take your investment plans to the next level, let’s connect. Together, we’ll create a tailored strategy to help you achieve your goals.
Why Work With an Independent Mortgage Professional? If you’re in the market for a mortgage, here’s the most important thing to know: Working with an independent mortgage professional can save you money and provide better options than dealing directly with a single bank. If that’s all you read—great! But if you’d like to understand why that statement is true, keep reading. The Best Mortgage Isn’t Just About the Lowest Rate It’s easy to fall for slick marketing that promotes ultra-low mortgage rates. But the lowest rate doesn’t always mean the lowest cost . The best mortgage is the one that costs you the least amount of money over time —not just the one with the flashiest headline rate. Things like: Prepayment penalties Portability Flexibility to refinance Amortization structure Fixed vs. variable terms …can all affect the true cost of your mortgage. An independent mortgage professional looks beyond the rate. They’ll help you find a product that fits your unique financial situation , long-term goals, and lifestyle—so you’re not hit with expensive surprises down the road. Save Time (and Your Sanity) Applying for a mortgage can be complicated. Every lender has different rules, documents, and policies—and trying to navigate them all on your own can be time-consuming and frustrating. When you work with an independent mortgage professional: You fill out one application They shop that application across multiple lenders You get expert advice tailored to your needs This means less paperwork , less stress , and more confidence in your options. Get Unbiased Advice That Puts You First Bank specialists work for the bank. Their job is to sell you that bank’s mortgage products—whether or not it’s the best deal for you. Independent mortgage professionals work for you. They’re provincially licensed, and their job is to help you: Compare multiple lenders Understand the fine print Make informed, long-term financial decisions And the best part? Their services are typically free to you . Mortgage professionals are paid a standardized fee by the lender when a mortgage is placed—so you get expert guidance without any out-of-pocket cost. Access More Mortgage Options When you go to your bank, you’re limited to that bank’s mortgage products. When you go to an independent mortgage professional, you get access to: Major banks Credit unions Monoline lenders (who only offer mortgages) Alternative and private lenders (if needed) That’s far more choice , and a much better chance of finding a mortgage that truly fits your needs and goals. The Bottom Line If you want to: Save money over the life of your mortgage Save time by avoiding unnecessary back-and-forth Access more lenders and products Get honest, client-first advice …then working with an independent mortgage professional is one of the smartest decisions you can make. Let’s Make a Plan That Works for You If you're ready to talk about mortgage financing—or just want to explore your options—I'm here to help. Let's connect and put together a strategy that makes sense for your goals and your future. Reach out anytime. I’d be happy to help.
Most people assume a bigger paycheck leads to a bigger mortgage approval. But here’s the truth that surprises almost everyone: “It’s not about how much you earn. It’s about how much of your income is already spoken for.” — Josh Perez I’ve sat across from clients earning six figures who qualified for less than someone making half as much. The problem wasn’t their income. It was their monthly obligations . Lenders Don’t Just Look at Income — They Look at What’s Left Over You can make $200,000 a year, but if $80,000 of it is tied up in payments, lenders see very little room for a mortgage. Here’s what typically eats up that space: Big car loans Multiple credit cards Buy-now-pay-later plans Personal loans Lines of credit Old debts that still report monthly payments These commitments matter because lenders are focused on one main calculation: Debt-to-Income Ratio (DTI) This tells lenders how much of your income is already locked into payments — and how much is available for a mortgage. A high DTI = lower mortgage approval A low DTI = stronger approval and better options It’s that simple. Want to Qualify for More? Do This First Most people think they need to increase their income. The truth? Reducing debt often has a bigger impact — and works faster. 1. Pay down or eliminate high monthly payments Even paying off a single loan can shift your approval dramatically. 2. Avoid taking on new credit before applying Every new payment reduces your borrowing room. 3. Keep your spending stable for 90 days Lenders review recent bank history. Stability helps. 4. Work with a mortgage broker, not just one bank This is one of the biggest ways people leave money on the table. Every lender calculates affordability differently. Some are far more flexible with DTI. If you only go to your bank, you’re only getting one version of your potential approval. Let’s Make Your Approval Work for You If you want to qualify for more, reduce debt strategically, or understand where you stand right now, I can help you build the right plan. Let’s give you access to more options — not just one.
