A rental property needs at least 20% down. There is no insured option for a property you will not live in, which puts you in conventional lending from the start.
20%Minimum down payment
Two methodsOf counting rent
Five unitsMoves to commercial
The purchases we finance
- You are buying your first rental and need to know the real down payment.
- You already own rentals and a bank has told you that you have reached your limit.
- You are buying a duplex or triplex and will live in one unit.
- You want to refinance an existing rental to fund the next purchase.
- You are buying with a partner or through a corporation.
What decides a rental file
- How the lender treats rental income decides the file. Some add a percentage of gross rent to your income, others count only the surplus after expenses and payments.
- Those two methods can be tens of thousands apart on identical properties. A file declined at one lender is routinely approved at another for that reason alone.
- If you live in one unit, some properties up to four units can still be insured with a smaller down payment, and the other rents can help you qualify.
- Five units or more moves into commercial lending entirely.
- Keep signed leases and rent deposit records. Lenders ask for both, and estimates do not count.
- Buying through a corporation changes the lender list and usually the rate. Decide the structure before you make an offer.
Documents to gather
- Government photo ID for each applicant
- Income confirmation for each applicant
- Existing lease agreements, or a market rent appraisal for a vacant unit
- Mortgage statements, tax bills and insurance for every property you already own
- T1 Generals with the T776 rental schedule for the last two years
- Purchase agreement and MLS listing for the property being financed
How an investment file runs
- 01 Map your whole portfolioLenders assess every property you own, not just the one being bought. We build that picture first.
- 02 Match to the right rental income treatmentAdd-back or offset. This single choice often decides whether the file works.
- 03 Confirm the down payment and reservesTwenty percent minimum, plus lenders often want reserves on top.
- 04 Submit and closeWe handle the appraisal, the lease review and the lender conditions.
Have a property in mind?
Start the application, or call 647-505-1096 and talk it through first.
Questions investors ask
- How much down payment do I need on a rental?
- At least 20%. Default insurance is not available on a property you will not occupy, so there is no lower-down-payment route.
- Will the rent help me qualify?
- Yes, but how much depends entirely on the lender's method. Some count a percentage of gross rent as income. Others net the rent against the property's costs and count only what is left.
- Is there a limit on how many rentals I can finance?
- Individual lenders cap the number of properties they will finance for one borrower, commonly around four or five. Once you hit a cap, the answer is a different lender, not the end of the road.
- Can I buy a rental through a corporation?
- Yes, though the lender list narrows and personal guarantees are normally required. Whether it makes sense is a tax question for your accountant, not a mortgage question.