The 20 percent threshold exists because CMHC and the other default insurers only cover owner-occupied purchases, and an uninsured rental mortgage carries more risk for the lender, so a landlord who is not living in the property is judged more conservatively. Expect a slightly higher interest rate on the investment side as well.
Rental income helps your qualifying ratios but is not counted in full. Most lenders will apply only a portion of a documented lease's rent toward your application, so the math has to work with your own income covering most of the payment, not the tenant's rent alone.
Joel Dyck works with buyers to confirm a property's suite legality and realistic rent before they commit financing, since an unpermitted unit changes what a lender will count. Get your hand-reviewed valuation from Joel Dyck.