Do you require a 20% down payment on a second property or vacation home?

In Canada, you can purchase your primary residence with as little as 5% down, provided the purchase price does not exceed $1 Million. To break it down a little more, you will require at least 5% of the first $500,000 and an additional 10% of the rest provided the home purchase does not exceed $1 Million. 

As far as investment or rental properties, however, mortgage lenders require at least a 20% down payment. 

Buying a second home. 

If you’re in the market to buy a vacation home or a second home, then you may be pleased to learn second homes and vacation homes do not require a down payment of at least 20%. You can purchase these types of properties  with as little as a 10% down payment. The loan amount must be at least $150,000 and cannot exceed $1 Million 

Investment property mortgages use rental income to qualify when your income may not be enough to service the additional mortgage loan you are requesting. However, when applying for a mortgage on a vacation property or to finance a second home, mortgage lenders will not use rental income or cash flow to help you qualify. Your income will need to service the mortgage payments. 

Second home programs can consider 2-4 season cottage properties, second homes for family members like children going away to school, for example, and more. Second home programs also consider recreational or seasonal properties (a plus for anyone in the market for these unique types of properties).

Do you need good credit to buy a second home or vacation property?

Because high-risk mortgage insurance companies facilitate the second home program, you will need a good credit score. 

But rest assured, you will also have access to the best mortgage interest rates under the second home program. 

A mortgage broker can help you with the second home program if you are in the market to add to your real estate collection. 

Please do not hesitate to call or write. 

Sarah A. Colucci
Mortgage Edge, Broker 10680
Direct: (647) 773-4849
Email: sarah.colucci@mortgagedge.ca 


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