How much down payment do I need for an investment property in Canada?

At least 20% for a property you won't live in, because a smaller down payment needs high-ratio mortgage default insurance, which is available only on a home the owner lives in. Some lenders ask for more on multi-unit rentals, and buildings with five or more units are financed with commercial or CMHC multi-unit mortgages instead. If you live in one unit of a two- to four-unit property, an insured mortgage with a smaller down payment is available.

Can rental income count toward mortgage qualification?

Yes. Lenders use either an offset method, where part of the rent is subtracted from the property's costs, or an add-back method, where part of the rent is added to your income. The share counted varies by lender, and a signed lease or an appraiser's market rent estimate is usually required.

Is mortgage interest on a rental property tax-deductible?

Yes. Interest on money borrowed to buy or improve a rental property is deductible against the rental income. The principal part of the payment is not. Interest on the mortgage for your own home is not deductible unless the borrowed money was used to earn investment or business income.

Should I hold my rental property in a corporation?

Rental income in a corporation is usually taxed as passive investment income at a high corporate rate, part of which is refunded when dividends are paid, rather than at the small business rate. Corporate ownership also makes residential mortgages harder to get. It tends to be considered at larger portfolio sizes and with professional advice; the WealthNorth guide to real estate investing in a corporation covers the trade-offs.

Investment Property Mortgages, Financing and Tax in Canada (2026)

These guides cover the financing and tax side of owning investment property in Canada: getting a rental mortgage, qualifying with rental income, borrowing against your home, deducting interest and reporting rental income. For strategy and returns, including rental property analysis, cap rates, the BRRRR strategy, house hacking, REITs and how real estate compares with stocks, see the real estate investing guide.

Two rules shape almost every investment property purchase. A property you won’t live in needs at least 20% down, because a smaller down payment needs high-ratio mortgage default insurance, which on a home of up to 4 units is available only if the owner lives there (larger rental buildings are insured under CMHC’s separate multi-unit programs). And lenders count only part of the expected rent when they qualify you, under the same stress test as any other new mortgage from a federally regulated lender.

Financing a rental property

Rental property mortgages: down payment by property type, rates, financing a second property and growing a portfolio
How rental income affects mortgage qualification: the offset and add-back methods and what lenders need to see
Using home equity to invest: HELOCs, refinancing and funding a rental down payment from your home
Airbnb mortgage rules: financing a short-term rental and how lenders treat the income

Tax on investment property

How rental income is taxed: Form T776, deductible expenses and rental losses
When mortgage interest is tax-deductible: rentals, suites in your home, investment borrowing and home offices
Capital cost allowance on rental property: whether to claim CCA, given recapture on sale
Capital gains on investment property: the tax when you sell
House flipping taxes: business income, the residential property flipping rule and the principal residence exemption
Real estate investing in a corporation: when incorporating helps and when it doesn’t

The full set of property tax rules is in the real estate tax guides, including CCA on rental property, capital gains on rental property, the flipping rules and the principal residence exemption.

Markets and property types

Best cities for investment property: rent relative to price, vacancy and landlord rules by city
Condo investment analysis: condo fees, special assessments and rental restrictions
Commercial real estate investing: apartment buildings, retail, office and industrial
How to buy a foreclosure: power of sale and judicial sale purchases
After repair value (ARV) calculator: valuing a renovation project and the 70% rule
How much is my house worth?: online estimates, assessments, comparative market analysis and appraisals

Running a rental

Property management guide: self-managing versus hiring a manager, and what it costs
Airbnb rules by city: licensing, principal residence requirements and fines

Related mortgage guides elsewhere on the site: buying a multiplex, the down payment on a second home and commercial mortgages.

Browse All Investment Property Mortgages, Financing and Tax in Canada (2026) Articles

Browse all 18 articles in this section.

A

B

Best Cities to Buy Investment Property in Canada (2026)

C

H

P

Property Management in Canada: Self-Manage or Hire a Property Manager? (2026)

R

Sources

The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.

CMHC: Calculating GDS / TDS
CMHC: CMHC Purchase
CMHC: Home Start
CMHC: CMHC Improvement
Department of Finance Canada: Technical backgrounder mortgage insurance rules income proposals revised october 14 2016
Department of Finance Canada: Government announces boldest mortgage reforms in decades to unlock homeownership for more canadians
Department of Finance Canada: Straight switches and portfolio insurance
Department of Finance Canada: Boldest mortgage reforms in decades come into force today
Financial Consumer Agency of Canada: Down payment
Financial Consumer Agency of Canada: Buying home
OSFI: Minimum qualifying rate for uninsured mortgages
OSFI: Final Revised Guideline B-20: Residential Mortgage Underwriting Practices and Procedures

3 more sources