Second Property / Rental Property
Whether you're looking for a second home to relax, give to family, or another source of income from a rental property, we got you.
Second Property or Second Home
A second home*, regardless of location, as long as it will be used at least once a year by your family, will have a minimum down payment is 5%.
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Important: Monthly rental income cannot be used to qualify for this type of Mortgage.
This is a critical distinction because it significantly increases the homeowner's debt servicing ratio for the Mortgage to be approved.
Homeowners cannot use rental income to offset mortgage payments on second homes.
They also have to debt service their current Mortgage and their second Mortgage.
*Not referring to a rental property.
Categories
Second Home
- Single Family dwellings only, with the specifications of a typical home residence
- High ratio financing (minimum 5% down) available through Sagen and Canada Guarantee
- Conventional Mortgage (minimum 20% down)
- Occupied by owners for a portion of the year, or by a family member living in with rent free
- Must have year-around access and be suitable for year-round use (indoor heating, fully-serviced water supply and electricity)
- Other conditions may apply
Recreational & Vacation Properties
- Must have residential-standard water and septic system, electrical and heating
- Must have a year-round road access quality properties
- Recreational purposes
- Other conditions may apply
Rental Property or Investment Property
For investment property or rental property, the first thing to consider is the number of units your building will have. Most buildings with 1-4 units are residential-zoned, so the qualification and financing options from lenders are just a bit more complex than that of a primary residence mortgage.
However, buildings with five or more units are zoned commercial, so a lender would require you to take out a commercial mortgage. Commercial mortgage qualification criteria are even tougher to meet, and interest rates are often much higher.
For multi-unit properties, another thing to consider is if you, the owner, will be living in one of the units or not. If you were occupying one of the units, the property would be considered owner-occupied. If all the units are rented, your property would be considered non-owner occupied. The significant difference between the two is how much of a down payment you need to make.
No. of Units
Owner-Occupied?
Down Payment Max
Loan-to-Value
1-2
Yes
5%
95%
1-2
No
20%
80%
3-4
Yes
10%
90%
3-4
No
20%
80%
As you can see, now-owner occupied investment properties require at least a 20% down payment. However, if you plan on living in one of the units, you can put down as little as 5-10%, depending on the total number of units in your property.
