Question 1

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

Accepted Answer

Investment properties require a minimum 20% down payment — CMHC default insurance is not available for non-owner-occupied properties. For a second home you intend to occupy part-time, minimum 5–10% may apply. On a $700,000 rental property, you need at least $140,000 down plus closing costs. Some lenders require 25–35% for multi-unit or commercial properties.

Question 2

Can rental income count toward mortgage qualification?

Accepted Answer

Yes — lenders can use rental income to qualify you for an investment property mortgage, but the mechanics differ by lender. Some use 50% of gross rental income (offset method), others use market rents on a rental income confirmation form. CMHC-insured properties use specific rental add-back rules. Lenders want to see signed leases or market rent appraisals. Self-employed landlords with multiple properties typically work with B-lenders or portfolio lenders.

Question 3

What is the difference between a duplex and investment property mortgage?

Accepted Answer

If you buy a duplex and live in one unit, you can qualify with as little as 5–10% down (insured mortgage possible for 2-unit owner-occupied). If you do not live there, 20% minimum applies. Lenders treat 1–4 unit residential properties differently from 5+ unit commercial properties. Owner-occupied duplexes and triplexes are among the best-leveraged entry points for real estate investors (the "house hacking" strategy).

Question 4

How do I qualify for a cottage or vacation property mortgage?

Accepted Answer

Cottages can be insured (5–10% down) if they are winterized, year-round accessible by road, suitable for year-round occupancy, and not intended as a rental property. Non-winterized or seasonal cottages typically require 20–35% down and higher rates. Lenders scrutinize seasonal properties carefully. Leasehold cottages (on crown land) are much harder to finance and usually require 35%+ down with specialty lenders.

Question 5

Should I hold my rental property in a corporation?

Accepted Answer

Incorporation offers potential tax deferral on rental income at the small business rate (if active business) or corporate rate (~26.5% in Ontario vs 53% personally). However, rental income in a corporation is generally taxed as "passive income" at ~50%, not at the small business rate — unless you have 5+ full-time employees (making it an active rental business). Professional tax advice is essential. See our corporate real estate investor guide.

Property Type	Minimum Down	CMHC Insured?
Primary residence (1 unit)	5–10%	Yes
Owner-occupied duplex (2 units)	5%	Yes
Owner-occupied triplex/fourplex (3–4 units)	10%	Yes
Non-owner-occupied 1–4 unit	20%	No
5+ unit residential (commercial)	20–25%+	No (CMHC has commercial program)
Cottage (insurable)	10%	Yes (if eligible)
Seasonal/non-winterized cottage	20–35%	No

Method	How It Works	Who Uses It
Offset method	50% of gross market rent reduces PITH for qualification	Most major bank lenders
Rental add-back	Add 80% of rental income to applicant income	Alternative lenders
Full rental income	Gross rental income added to total income	Portfolio lenders

Checkpoint	Target range	Why it matters
Net cash flow after all costs	Positive monthly	Helps survive rate and repair shocks
Debt service coverage ratio	1.20x+	Lender comfort and portfolio resilience
Vacancy assumption	3-8% by market	Prevents overestimating income
Capex reserve	5-10% of rent	Covers major repairs over time

Investment Property Mortgages & Financing in Canada 2026

Investment property financing rules

Down payment requirements

Rental income qualification

Investment property articles

Rental property

Commercial & specialty

Cottage & vacation properties

Tax considerations

Corporate structure

Investment property deal-screen checklist

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