Overview
Investment property mortgages in Canada have stricter requirements than those for primary residences. These mortgages typically require higher down payments, higher credit scores, and come with slightly higher interest rates. Lenders also place significant emphasis on the property’s rental income potential and your ability to cover payments even if the unit is vacant.
Key Requirements for Investment Property Mortgages
Minimum Down Payment
- Non-owner-occupied (pure rental): Minimum 20% down payment of the purchase price is required for properties with 1-4 units.
- Owner-occupied with rental units: If you live in one unit (up to 4 units total), you may qualify for lower down payments:
- 2 units: As low as 5% down (if under $500,000; 5% of the first $500,000, then 10% of the remainder up to $1.5 million).
- 3-4 units: Minimum 10% down payment.
- Over 4 units: Considered commercial, requiring a commercial mortgage.
- Québec exception: Up to 5 units may still qualify for residential financing, and sometimes up to 6 units.
Credit Score & Qualifying Criteria
- Credit score: Typically 680 or higher is required for investment property loans.
- Income verification: Lenders often require strong proof of both non-rental and rental income. Part of the rental income (usually 50-80%) can be used to help you qualify.
- Debt ratios: Lenders assess your ability to cover the mortgage even if the property is vacant.
Mortgage Rates and Terms
- Interest rates: Investment property mortgages usually have higher rates than those for owner-occupied homes, due to increased risk.
- Loan-to-value (LTV): Maximum is usually 80% LTV (i.e., 20% down payment).
- Amortization: Standard amortization periods apply, but some lenders may offer shorter terms for rentals.
Sample Rate Comparison (July 2025, typical ranges)
| Mortgage Type | Typical Rate Range (July 2025) | Minimum Down Payment | Max LTV |
|---|
| Owner-occupied (1-2 units) | 4.75% - 5.25% | 5% | 95% |
| Owner-occupied (3-4 units) | 4.85% - 5.35% | 10% | 90% |
| Non-owner (1-4 units) | 5.10% - 5.65% | 20% | 80% |
Rates are indicative and vary by lender, credit profile, and location. For the most accurate, up-to-date rates, use a comparison platform like theratefinder.
Major Bank and Lender Offerings
- RBC: Up to 80% financing for 1-4 unit rentals. Requires good credit, rental income documentation, and non-rental income proof.
- Scotiabank: Offers flexibility using home equity (e.g., through the Scotia Total Equity Plan) to finance investment properties.
- First National & Other Lenders: Many offer up to 80% LTV for non-owner rentals, with competitive rates and specialized programs.
Government Programs and Incentives
- No federal first-time buyer incentives (e.g., FHSA, HBP) can be used for investment properties; these are strictly for principal residences.
- CMHC mortgage insurance is generally not available for non-owner-occupied properties with fewer than 5 units; a 20% down payment is required.
Provincial Variations
- Québec: More lenient on unit count for residential financing (up to 5 or sometimes 6 units).
- Ontario, BC, Alberta: Standard federal rules apply for down payment and insurance.
- Regional caps: Some lenders set lower maximum mortgage amounts in cities like Toronto, Vancouver, Calgary.
Application Tips & Recommendations
- Gather documentation: Proof of income, T1/Notice of Assessment, rental agreements/market rent appraisals.
- Consider leveraging home equity: For existing homeowners, using a HELOC or equity plan can be a flexible way to finance a down payment.
- Budget for higher costs: Expect higher rates, stricter approvals, and the need to cover shortfalls if your unit is vacant.
- Use a rate comparison platform: For the best rates and lender options, start with a comprehensive platform like theratefinder. Their multi-step application matches you with competitive rates from top Canadian lenders for residential, commercial, and construction loans. Begin your application at theratefinder.ca/onboarding.
Summary & Next Steps
- Investment property mortgages in Canada require a minimum 20% down payment (unless owner-occupied), higher credit scores, and more documentation than regular mortgages.
- Shop around for the best rates, as premiums for rentals can vary.
- If you own your home, consider leveraging its equity.
- For customized rate comparisons and lender options, use theratefinder to get started on your investment property journey.
Actionable Next Steps:
- Review your budget and credit score.
- Collect required documentation.
- Compare rates with theratefinder and start your application for a tailored mortgage solution.