Cottage and Recreational Property Mortgages in 2026

Owning a cottage or recreational property remains a dream for many Canadians. In 2026, while interest rates are more stable than in previous years, financing vacation properties still comes with unique rules and requirements. Understanding how cottage and recreational property mortgages work can help buyers plan confidently and avoid surprises.

What Qualifies as a Cottage or Recreational Property?

Lenders classify recreational properties as:

• Seasonal cottages or cabins

• Waterfront or rural vacation homes

• Chalets and secondary-use properties

Properties used year-round with full services often qualify for better mortgage terms than seasonal-use properties.

Mortgage Rules for Cottages in 2026

Cottage mortgages are typically more restrictive than principal residences. In 2026, lenders assess:

• Property accessibility year-round

• Utilities such as water, sewage, and heating

• Property condition and zoning

• Marketability and resale potential

Remote or seasonal properties may face stricter rules.

Down Payment Requirements

Most cottage mortgages require:

• 20%–35% down payment, depending on property type

• Higher equity for seasonal or remote locations

Some four-season recreational properties may qualify for lower down payments with select lenders.

Interest Rates and Terms

Cottage mortgage rates are often:

• Slightly higher than primary residence rates

• Available in fixed and variable options

• Offered with shorter terms for flexibility

Alternative lenders may offer more flexibility at higher rates.

Rental Income Considerations

If you plan to rent your cottage:

• Lenders may consider a portion of rental income

• Proof of market rent or lease agreements may be required

• Zoning and local bylaws must allow short-term rentals

Rental use can impact qualification and insurance.

Using Home Equity to Buy a Cottage

Many buyers leverage equity from their primary residence through:

• Refinancing

• HELOCs

• Second mortgages

This strategy can simplify qualification but increases overall debt.

Insurance and Additional Costs

Cottage ownership includes:

• Higher insurance premiums

• Maintenance and seasonal costs

• Road access and utility expenses

Lenders may factor these into affordability assessments.

Tips for Cottage Buyers in 2026

To improve approval odds:

• Choose properties with year-round access

• Prepare larger down payments

• Maintain strong credit profiles

• Work with lenders experienced in recreational properties

Final Thoughts

Cottage and recreational property mortgages in 2026 offer exciting opportunities—but require careful planning. By understanding lender rules, down payment expectations, and property requirements, Canadians can enjoy vacation property ownership with confidence.