Down Payment for a Second Home in Canada: Vacation Home vs Rental (2026)

The down payment on a second property depends on three things: the price, how you will use the property (as your own vacation home or as a rental), and whether the mortgage carries default insurance. This page covers those rules and where the money can come from. It is part of our guide to property types in Canada; the mortgage itself, including the property standards lenders apply to a cottage, is covered in cottage and second home mortgages.

The minimum down payment rules

The minimum down payment is 5% of the first $500,000 and 10% of the rest for homes under $1.5 million, and 20% at $1.5 million or more. Those minimums assume an insured mortgage. With less than 20% down you need mortgage loan insurance. The down payment calculator works out the minimum for any price.

Whether a second home can get mortgage default insurance depends on the insurer’s program and on the property, and a down payment under 20% is possible only on an insured mortgage. CMHC’s mortgage rules and the guide to insured vs uninsured mortgages explain how default insurance works and who offers it.

A conventional (uninsured) down payment

With 20% or more down, the mortgage doesn’t need default insurance. These are the amounts at a few example prices:

A lender can ask for more than the minimum. Lenders that finance a seasonal, remote or leased-land cottage often want a larger down payment than they would on a four-season home with year-round road access; what lenders look for in a cottage lists the property features that matter.

Vacation home or rental: why the use matters

Lenders ask how you will use the property, and the answer sets the rules. Misstating the intended use on a mortgage application can amount to mortgage fraud.

A property you will rent out. A home you won't live in needs at least 20% down: high-ratio mortgage insurance (less down) is only for a home that you, or a spouse, partner, parent or child living there rent-free, will occupy, CMHC insures two- to four-unit rentals only up to 80% of the value, and a one-unit rental can't be insured at all; if you live in one unit of a two- to four-unit property, an insured mortgage with a smaller down payment is available. Financing a rental is covered in rental property mortgages, and buying a two- to four-unit home you will live in is covered in buying a multiplex.

A home for your own use. A cottage or vacation home you use yourself is financed on your income alone, with no rent counted, and its down payment follows the rules above. The rest of the buying process, from well and septic checks to insurance and carrying costs, is in the guide to buying a vacation property.

Where the down payment can come from

For the minimum itself, the source matters. The minimum down payment normally has to come from your own funds, and a lender may ask for more if you're self-employed or have a poor credit history.

Using equity in your main home

Many owners fund a second property’s down payment with a HELOC or refinance on the home they already own. The new borrowing counts in your debt ratios, and federal limits cap how much of the home’s value can be borrowed; using home equity to invest covers those limits and when the interest is deductible, and current HELOC pricing is in HELOC rates.

Qualifying with two homes

The lender counts the housing costs of both properties, plus your other debts, in your debt service ratios, calculated at the stress-test rate rather than your contract rate. How that works, with a worked example, is in qualifying while carrying two properties.

Taxes on a second property

Tax doesn’t change the down payment, but it changes what a second home costs over time. Selling a cottage you use yourself can trigger a taxable gain unless the principal residence exemption covers it, and only one home per family can be designated for a given year (how the designation works); renting it, gifting it and owning abroad are worked through in taxes on a cottage.

Steps before you apply

• Decide how you will use the property (personal use or rental) and declare it as such to the lender.
• Work out the down payment for the price with the down payment calculator, and confirm with the lender or broker whether the mortgage will be insured or conventional.
• Line up the source of the down payment and the paperwork that proves it.
• Get a pre-approval that counts the costs of both homes.
• Arrange property insurance for the second home; the home insurance guides cover the options.
• Review your will and estate plan; a cottage often needs a succession plan.