Income Suites 101

Find the perfect legal income suite for your property with our expert guidance.

What is an Income Suite?

An income suite, also known as a legal suite, is a separate living space within a building or on a property that is rented out to generate income. Two of the main benefits of adding a legal suite to your new home are you are eligible to qualify for a higher mortgage and you can use the rental income to pay off your mortgage faster.

Benefits of a Legal Suite:

Qualify for a Higher Mortgage

Did you know when buying a home with an income suite, you can actually qualify for a higher mortgage amount? When buying a home with an Income suite, you get to add this income to the monthly income from your job. Depending on the lender, use can use up to 100 percent of the potential rental income to qualify for a mortgage!

For example, if you earn $4,000 each month, you could potentially qualify for a mortgage requiring a total monthly payment of $1,400 (35 percent of $4,000). With an extra $1,000 in rental income, you could qualify for a mortgage payment of $1,750 (35 percent of $5,000).

Let Renters Pay Your Mortgage

The average current rent for a 1 bedroom basement suite in Edmonton is $1100/month. Let’s use an example of how your mortgage payments would look with rental income being applied to your monthly payments: 

  • Cost of Home: $469,000
  • Mortgage Payments Before Income Suite: $2,400/month
  • Mortgage Payments After Income Suite: $1,300/month (with rent being applied to your mortgage payments)

This means you:

  • Pay off your mortgage 11 YEARS FASTER
  • Will have your mortgage paid in 14 YEARS (instead of 25)
  • Will SAVE OVER $116,200 in interest fees

Is an Income Suite right for you?

An Income Suite can be very advantageous to people looking to purchase a new home. Did you know that secondary income suites can help supplement your monthly mortgage through rental income payments? This makes owning a home or building a new home much more attainable, as the CMHC allows 100% of rental income to be applied when qualifying for a mortgage.

As the CMHC states, secondary suites are an excellent source of affordable rental housing as they can also provide the needed extra income to first-time buyers for whom that additional income makes housing affordable in high-cost areas.

Let us help you find your new home with an income suite!

Types of Income Suites: Basement suite vs. Garden/Garage Suite

A basement suite is a separate living space within the basement of a building or house that is rented out to generate income. A garden suite, on the other hand, is a separate living space that is located on the same property as the main dwelling, but is not connected to the main building. It is typically a standalone structure, or positioned above a laned home’s rear detached garage.

There are a few key differences between basement suites and garden suites:

  1. Location: As mentioned, a basement suite is located within the basement of a building, while a garden suite is a standalone structure on the same property as the main dwelling – often located on the upper level of a rear detached garage.
  2. Privacy: Garden suites often offer more privacy, as they are separate from the main dwelling and are not connected to it. Basement suites, on the other hand, may not offer as much privacy, as they are located within the same building as the main dwelling.
  3. Natural light: Garden suites may receive more natural light, as they are not located underground like basement suites, and often have more windows.
  4. Size: The size of a basement suite and garden suite is dependent on the size of the home or the rear detached garage.