With interest rates as low as they are, for as long as they have been, many Canadians who once mulled over the idea of buying an investment property are now seriously considering taking the plunge with a rental income property.
Rental property or second home?
Don't confuse a rental property with a second home and vice versa. There's an important distinction between the two when it comes to getting the right type of financing. From a lender's perspective, a rental property is a property you are buying to rent out to tenants and generate income. On the other hand, a second home is for the exclusive use of you and your family to either live in or use for leisure.
What are the rental income property mortgage down payments?
As a buyer, you are expected to pay for a portion of the property yourself. This portion is called a down payment. If your lender requires that you have government-backed mortgage insurance, the minimum amount you need for a down payment will vary on the type of property you are planning on purchasing.
Mortgage Glossary: Understanding The Language Of Mortgages
If you are getting a mortgage for an owner-occupied property that has a purchase price of less than $1 million--like a duplex or triplex and you plan to live in one of the units--you will need to have a down payment of at least five per cent; otherwise a minimum 20 per cent down payment is needed.
If you are looking to purchase a property and will not be living at the address (often referred to as a non-owner-occupied property), you will need to have at least 20 per cent.