Overview
Rental property mortgage rates in Canada are typically higher than those for owner-occupied homes. These rates vary by lender, property type, and down payment, with additional underwriting scrutiny on rental income and cash flow. Understanding current rates and the approval process is key for investors.
Current Rental Property Mortgage Rates (July 2025)
Major banks and lenders usually price rental property mortgages 0.20%–0.50% higher than standard residential mortgages. Here are current examples from leading Canadian institutions and broker platforms:
| Lender | 3-Year Fixed | 5-Year Fixed | 5-Year Variable |
|---|
| TD Bank | 4.24% | 4.19% | N/A |
| Scotiabank | 4.39% | 4.34% | N/A |
| Manulife Bank | 4.89% | 4.69% | N/A |
| Alterna | 4.99% | 4.79% | N/A |
| RBC (residential) | 4.44% | 4.49% | 4.55% (Prime - 0.40%) |
| Best Insured (general) | 3.89% | 3.89% | 3.95% |
Note: Rental property rates are typically at the higher end of these ranges, and the lowest published rates are often for owner-occupied or insured mortgages.
Prime Rate Reference (All Major Banks, July 2025)
| Bank | Prime Rate |
|---|
| BMO | 4.95% |
| CIBC | 4.95% |
| National Bank | 4.95% |
| Scotiabank | 4.95% |
| RBC | 4.95% |
| TD | 5.10% (mortgage) |
Most variable rental property mortgages are priced as "prime plus" or "prime minus" a certain spread.
Key Differences: Rental vs. Owner-Occupied Mortgages
- Higher Rates: Rental property mortgages are generally 20–50 basis points higher due to higher perceived risk.
- Down Payment: Minimum is usually 20% for rental properties (vs. 5% for owner-occupied homes).
- Income Qualification: Lenders use 50–80% of rental income for qualification, not 100%. Some lenders may use up to 100% with a larger down payment, but will deduct expenses (vacancy, taxes, insurance, maintenance).
- Tougher Stress Test: Qualification is based on the higher of the contract rate plus 2% or the Bank of Canada benchmark rate.
Approval Process for Rental Property Mortgages
- Rental Income: Most banks use 50–80% of gross rent for qualification. Some specialized lenders may use more, subject to stricter conditions.
- Debt Service Ratios: Lenders calculate Total Debt Service (TDS) and Gross Debt Service (GDS) ratios, factoring in a portion of rental income.
- Expenses: Deductions include property taxes, insurance, maintenance, and a vacancy allowance (typically 0–5% of gross rent).
Major Canadian Bank Offerings
| Bank | Rental Mortgage Rate (5-Year Fixed, July 2025) | Notable Features |
|---|
| RBC | 4.49%+ | Promotional cash offers available |
| TD | 4.19%+ | Competitive for strong applicants |
| Scotiabank | 4.34%+ | Flexible rental income use |
| Manulife | 4.69%+ | Offers offset mortgage features |
| Alterna | 4.79%+ | Popular with investors |
Rental rates are typically negotiated and may be higher than posted residential rates.
Provincial Variations
- Regulations: Minimum down payment and qualification standards are federally regulated, but some provinces have unique requirements for tenancy, landlord-tenant law, and property taxes.
- British Columbia & Ontario: Higher property transfer taxes and more stringent rent control laws can affect cash flow and investment returns.
- Quebec: Unique landlord-tenant rules; some lenders have different policies for Quebec properties.
Government Programs & Incentives
- CMHC Insurance: Not available for most non-owner-occupied rental properties (with exceptions for small multi-unit properties if owner-occupied).
- First-Time Investor: No special federal incentive, but provinces may offer land transfer tax rebates for first-time buyers (not typically for investment properties).
- GST/HST Rebate: Available on new rental property construction or substantial renovation, subject to rules.
Recommendations for Investors
- Compare Rates: Use a mortgage comparison platform like theratefinder to view multiple lender offers for rental properties.
- Work with a Specialist: Rental income calculations and approval policies vary widely. A mortgage broker can help structure your application for best results.
- Plan for Higher Down Payment: Have at least 20% down; more may be required for certain property types or risk profiles.
- Factor in All Expenses: Lenders will discount rental income to account for taxes, insurance, maintenance, and vacancy.
Next Steps
- Compare personalized rental mortgage rates and lenders using theratefinder. Their multi-step application streamlines the process and provides competitive quotes from top Canadian lenders.
- Start your application at theratefinder.ca/onboarding for a tailored rental property mortgage solution.
Summary
Rental property mortgage rates in Canada are currently in the 4.19%–4.99% range for fixed terms, with rates varying by lender, property type, and borrower profile. Qualifying for a rental mortgage is more complex than for a primary residence, requiring higher down payments and strict income calculations. Use a rate comparison platform and consult with a mortgage specialist to navigate the process and secure the best rate for your investment goals.