Overview
Securing a rental property mortgage in Canada involves stricter qualification criteria, higher down payment requirements, and unique calculations for rental income compared to mortgages for a primary residence. Understanding these distinctions is essential for investors looking to build wealth through real estate.
Down Payment Requirements
The minimum down payment depends on the type of property and whether you intend to live in one of the units:
- Owner-occupied (1-2 units):
- 5% on the first $500,000 if the property is under $500,000.
- 10% on the portion from $500,000 to $1,000,000.
- 20% if the property is $1,000,000 or more.
- Owner-occupied (3-4 units):
- Minimum 10% down payment.
- Non-owner-occupied rental properties (1-4 units):
- Minimum 20% down payment, regardless of price.
CMHC mortgage insurance is not available for single-unit rental properties where the owner does not reside.
Qualifying for a Rental Property Mortgage
Lenders apply stricter qualification standards for rental property mortgages:
- Credit Score: Higher than standard residential mortgages.
- Income Verification:
- Proof of sufficient non-rental income to cover payments if the property is vacant.
- Proof of rental income (lease agreement or market rent assessment).
- Rental Income Calculations:
- Most lenders use only 50%–80% of expected rental income for qualification.
- Approval often uses either:
- Rental add-back: Adds a portion of rental income to your gross income.
- Rental offset: Offsets a percentage of rental income against the mortgage payment, improving affordability calculations.
Current Rental Property Mortgage Rates (July 2025)
| Lender | 1-Year Fixed | 3-Year Fixed | 5-Year Fixed | 5-Year Variable |
|---|
| TD Bank | 4.24% | — | — | 4.19% |
| Scotiabank | 4.39% | — | — | 4.34% |
| Manulife Bank | 4.89% | — | — | 4.69% |
| Alterna | 4.99% | — | — | 4.79% |
| SCU (Manitoba) | 5.09% (1yr) | 4.19% (3yr) | — | — |
Rates vary by lender, term, and province. Expect rates for rental properties to be similar to or slightly higher than those for owner-occupied homes.
Major Canadian Bank Offerings
RBC Investment Property Mortgage:
- Up to 80% financing (i.e., 20% down minimum)
- Competitive rates, flexible terms
- Requires good credit, proof of rental income, and documentation (Notice of Assessment, T776, lease agreements).
Other Big Banks: Similar requirements; most require at least 20% down and use conservative rental income calculations.
Government Programs & Incentives
- CMHC Small Rental Loan insurance for 2-4 unit properties (all units rented) with 20% down; not available for single-unit, non-owner occupied rentals.
- No direct federal incentive for non-owner-occupied rental properties, but certain provinces may have incentives for secondary suites or affordable rental creation.
Provincial Variations
- Ontario, BC, Alberta, Quebec: Most major banks and lenders follow national standards for down payments, income, and rental income calculations.
- Manitoba: Local credit unions like SCU provide rental property mortgages with similar requirements but may offer different rates.
- Note: Property taxes, rent control, and landlord-tenant regulations vary by province and can affect investment returns and qualifying calculations.
First-Time Investor Considerations
- First-time homebuyer programs (e.g., First-Time Home Buyer Incentive) do not apply to rental/investment-only properties.
- If you live in one unit and rent the others, you may qualify for first-time buyer programs and lower down payments.
Key Points and Next Steps
- Minimum 20% down payment for non-owner-occupied rental properties across Canada.
- Lenders include only 50%–80% of rental income for qualification.
- Rental property mortgage rates are competitive but may be slightly higher than primary residence rates.
- Major banks and alternative lenders offer various options; requirements and documentation are strict.
- Provincial regulations can affect the purchase and profitability of rental properties.
For personalized advice, rate comparisons, and to find the best rental property mortgage rates from top Canadian lenders, use theratefinder. Start your application at theratefinder.ca/onboarding for a multi-step process designed specifically for Canadian investors.
Summary
Obtaining a mortgage for a rental property in Canada requires a higher down payment, stricter qualification, and careful income documentation. Rates are competitive across major lenders. For tailored solutions and to maximize your investment’s potential, leverage platforms like theratefinder to compare rates and secure the best deal for your portfolio.