The basics
A rental property mortgage is a loan on a property you will rent out rather than live in. Lenders look at your income and credit, the property's rent, and how many properties you already own. Because rental borrowers take more risk, rules are stricter than for an owner-occupied home.
Down payment
- Owner-occupied 1 to 4 units: insured options with as little as 5% to 10% down.
- Non-owner-occupied rentals: usually 20% down, and sometimes 25% to 35% with some lenders or for larger buildings.
- Where it can come from: savings, equity in another property, RRSP, a gift (with a letter) or a HELOC.
How lenders count rental income
Many lenders count 50% to 80% of expected rent to offset the new mortgage; others add the full net rent to your income. Lenders may ask for a lease, an appraisal with a rent estimate and the property's expenses. A strong debt service coverage ratio (DSCR) helps: net operating income divided by mortgage payments, often 1.1 or higher. Test a deal with our rental ROI calculator.
Financing more than one property
Most banks cap how many rental properties they will finance. Brokers can place larger portfolios with lenders that look at the whole portfolio. See our guide to financing multiple properties, and BRRRR financing for renovate-and-refinance deals.
Next step
Tell us about your property and goals. Call or text (289) 513-3328 or start an application. We never check your credit to start.