Rental Investment Mortgage
Rental Mortgages: Upto 8 properties permitted for income-generating rental properties.
CMHC Programs: Upto 4 units permitted and 100% Rental Income Qualification
Equity Based Mortgages: Build a portfolio with upto 50 properties or $50M in Asset Value
Rental Programs: Short Term Rentals, Student Housing, upto 6-Plex Rental Properties
Rental Investment Mortgage in Canada: Your Guide to Financing Rental Properties
Investing in rental properties is a popular way to build wealth, but obtaining a mortgage for a rental property requires a unique approach. Rental investment mortgages are designed specifically for those looking to purchase or refinance rental properties. This guide covers everything you need to know about rental property mortgages in Canada, including qualifications, requirements, and strategies to secure the best rates.
Qualification Criteria for Rental Property Mortgages
To qualify for a rental investment mortgage, lenders typically require the borrower to meet certain criteria that are stricter than those for primary residences. Key factors include:
Credit Score: A minimum credit score of around 620 to 650 is often required for rental property mortgages.
Income Verification: Lenders will assess your income to ensure you can manage the mortgage payments. They may also consider additional sources of income, such as rental income.
Employment Status: Stable employment or self-employment history is essential for securing approval.
Property Type: The property must be designated for rental use and meet specific occupancy requirements.
Acceptable Income Sources for Rental Mortgage Approvals
When applying for a rental property mortgage, lenders typically consider a variety of income sources. Acceptable income includes:
Rental Income: A key consideration when applying for a rental investment mortgage. Lenders will factor in the potential rental income generated by the property.
Employment Income: Salaries and bonuses can be used to qualify, though it may be harder for self-employed applicants.
Other Investment Income: Income from stocks, bonds, or other investments can be considered to demonstrate your ability to service the loan.
Impact of Rental Income on GDS/TDS Ratios
5 Year - Fixed Term from
4.29%
Apply for your Best Rate in minutes.
Everyone's rate is unique.What's yours?
It is our job to get your lowest possible rate. Your rate qualification depends on certain factors, such as credit score and home equity as per regulations.
*Advertised rates may not be offered by this lender. Mortgage lender offers are aggregated by RateShop & its Brokerage Network subject to change without notice. Speak with our mortgage broker about APR and qualification requirements.
The Gross Debt Service (GDS) and Total Debt Service (TDS) ratios are important factors in determining your eligibility for a rental property mortgage:
GDS Ratio: This measures your housing-related debt, including mortgage payments, property taxes, and heating costs, as a percentage of your gross income.
TDS Ratio: This includes all debt obligations (housing costs plus consumer debt payments) and is typically capped at around 40% to 44% of your gross income.
Rental income can offset these ratios and improve your eligibility, but lenders may discount a portion of rental income (typically 50% to 80%) to account for vacancies and maintenance costs.
Down Payment Requirements for Investment Properties
For rental property mortgages, down payment requirements are typically higher than for primary residences. In Canada, you can expect to pay:
Minimum Down Payment: At least 20% of the property's purchase price for conventional loans.
Higher Down Payments: Some lenders may require a larger down payment, especially for multi-unit properties or if your credit score is on the lower end.
A larger down payment may result in better mortgage rates and terms.
Rate Differences for Primary Residence vs. Rental Properties
Mortgage rates for rental properties tend to be higher than for primary residences. This is because rental properties are considered riskier investments by lenders due to the potential for vacancies and varying rental income. Key points to consider:
Higher Interest Rates: Rental property mortgages can have interest rates that are 0.5% to 1.0% higher than those for primary homes.
Longer Amortization Periods: You may be able to secure longer amortization periods, such as 25 years, though rates may vary depending on the lender and your financial profile.
Financing Multi-Unit vs. Single-Unit Rental Properties
The financing requirements for multi-unit properties differ significantly from those for single-unit rentals:
Single-Unit Properties: Generally easier to finance and qualify for, with lower down payment requirements and better rates.
Multi-Unit Properties: More complex, as they are considered commercial properties by some lenders. They typically require a larger down payment (20% to 35%) and more detailed financial statements.
Rental income from multi-unit properties can be factored into your approval, but the larger loan amounts and higher risk make approval more challenging.
Alternative Lenders for Investors with Complex Portfolios
Investors with complex portfolios, such as those with multiple rental properties or non-conventional income sources, may need to consider alternative lenders. These lenders offer:
Flexible Qualification Criteria: Alternative lenders may have more lenient requirements for those with multiple properties or unique income sources.
Higher Rates: While the rates may be higher than those offered by traditional banks, they provide an avenue for investors who cannot meet the stricter qualifications of conventional lenders.
Lenders such as MCAP, CMLS, and others in the private lending space can help investors secure the financing they need.
RateShop’s Strategies for Securing Optimal Rental Property Rates
RateShop’s experienced mortgage brokers specialize in securing competitive rates for rental property mortgages. We help investors navigate the complexities of financing rental properties by:
Negotiating Better Rates: RateShop brokers have access to a wide network of lenders, including banks, credit unions, and alternative lenders, to find the best mortgage rates for your needs.
Customized Solutions: We tailor mortgage solutions to meet your specific investment goals, whether you’re purchasing a single-unit rental or a multi-unit property.
Expert Advice: Our brokers provide expert advice to help you manage your rental portfolio and make informed decisions about refinancing or expanding your investment properties.
Unlock Your Rental Investment Potential with the Right Mortgage
Rental investment mortgages offer a great opportunity for investors to build wealth through real estate. However, the qualification process and financing requirements can be more complex than for primary residences. Working with RateShop brokers can help ensure that you secure the best rates and terms for your rental property investment.
As Seen And heard on
Quick Links
Calculators
Contact Information
6 Indell Lane, Brampton ON L6T 3Y3, Canada
Local: 416-827-2626
Toll: 800-725-9946
RateShop Inc. is a Mortgage Brokerage offering lowest mortgage rates to Canadians. We are provincially licensed in the following provinces: Mortgage Brokerage Ontario FSRA #12733, British Columbia BCFSA #MB600776, Alberta RECA #00523056P, Saskatchewan FCAA #00511126, PEI #160622, New Brunswick FCNB #88426, Newfoundland/Labrador. Our Quebec Mortgage Transactions are serviced by Orbis Mortgage Group AMF# 181136.
Copyright 2025. RateShop Canada. All Rights Reserved.