Down Payment Required For An Investment Property

To purchase an investment property, mortgage lenders usually require a borrower to have at least a 20 per cent down payment. However, there are other mortgage programs that allow borrowers to purchase second homes with as little as 10 per cent down, such as cottage properties or housing for children studying away from home. 

Using Rental Income To Qualify For A Mortgage

Mortgage brokers can use rental income to qualify for financing an investment property. Some lenders allow up to 100 per cent of the property's rental income to be added back to the borrower's gross income, which helps to qualify for a larger mortgage amount.

A client wanted $180K financing on his $330K home purchase in Calgary . He had $100K cash (20 per cent) and the home was 80 per cent financing, 20 per cent down.

He wanted to finance an investment property for $300-325K in Calgary , which would bring his total assets to over $500,000 with a 25 per cent down payment.

However, he had little income (he was a student) and his credit was not good enough to qualify for the full financing he wanted.

So, with our help, he submitted an offer with high rental income to meet his requirement of at least 20 per cent down. His property in Calgary had two three-bedroom suites generating $1,400/mo each in gross rents for a total of $2,800/mo. His lender allowed 100 per cent of this income to be added to his gross annual income for qualification purposes because it was at least 20 per cent down .

This helped him get the financing he wanted with only 10 per cent cash and 90 per cent mortgage.

If you want to finance an investment property with high rental income, we recommend submitting an offer to the lender first before proceeding with a purchase. Apply today to complete a mortgage pre-approval.

The Maximum Mortgage Allowed On An Investment Property

When purchasing an investment property, lenders will finance up to 80 per cent of the property's value or up to 90 per cent of the loan to value if the property is being used as a second home.

Refinancing Your Existing Property To Buy An Investment Property

You can refinance your mortgage on your existing property to take access your down payment or equity required to use towards the purchase of your investment property. You can also obtain a home equity line of credit (HELOC) on your principal residence to fund the down payment on your investment property. 
​I can help you understand what is required in order to successfully purchase and manage an investment property while at the same time ensuring you obtain the best mortgage rate on the best terms. Give my office a call today to discuss your next purchase at (647) 773-4849

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  • Structuring your mortgage differently.