Overview
Rental property mortgage rates in Canada are generally higher than those for owner-occupied homes. As of August 2025, typical rates for rental and investment properties range from about 4.24% to 4.99% for five-year fixed terms, depending on the lender, property type, and borrower profile. These rates reflect current market conditions, including a Bank of Canada overnight rate of 2.75% and a prime rate of 4.95%.
Detailed Information
Current Rental Property Mortgage Rates
Rental property mortgage rates vary by lender and province. Below is a comparison of recent offerings from major Canadian banks and lenders:
| Lender | 5-Year Fixed Rate | 5-Year Variable Rate |
|---|
| TD Bank | 4.24% | 4.29% |
| Scotiabank | 4.29% | 4.39% |
| Manulife Bank | 4.79% | 4.79% |
| Alterna | 4.99% | 4.79% |
Rates as of August 2025. Actual rates and eligibility depend on borrower profile, property type, and regional factors.
Conventional vs. Insured Mortgages
- Rental properties typically require a minimum 20% down payment. Insured mortgages (less than 20% down) are not available for non-owner-occupied properties.
- Rates for insured mortgages (owner-occupied) can be lower, sometimes in the 3.9%–4.1% range for high-ratio products.
- Rental property rates are usually 0.25%–0.75% higher than owner-occupied rates due to added risk for lenders.
How Rental Income Is Used for Approval
- Most lenders use 50%–80% of gross rental income for qualification purposes, not the full amount.
- Some lenders may use up to 100% of lease income with a 25% down payment, but this often comes with higher rates and stricter deductions (vacancy, taxes, maintenance, insurance).
- Approval is subject to the Total Debt Service (TDS) ratio—often up to 44% of total income (including rental add-back).
Market Conditions
- Bank of Canada overnight rate: 2.75% (held steady since March 2025 after seven rate cuts).
- Prime rate: 4.95%
- Fixed rates: Influenced by government bond yields, currently elevated but trending downward.
- Variable rates: Linked to prime, expected to decrease if further Bank of Canada rate cuts occur later in 2025.
Major Bank Offerings
Most major banks offer rental property mortgage products, usually at rates similar or slightly above their conventional mortgage offerings:
| Bank | 5-Year Fixed Rate | 5-Year Variable Rate |
|---|
| RBC | 4.72% | 4.58% |
| BMO | 4.66% | 4.67% |
| CIBC | 4.56% | 4.77% |
| TD | 4.61% | 4.81% |
| Scotiabank | 4.39% | 4.58% |
Rates may be higher for rental properties or require uninsured qualification.
Provincial Variations
- Ontario, British Columbia, Quebec, Alberta: Rental property mortgage rates and minimum down payment rules (20%) are consistent across these provinces.
- Provincial regulations may affect:
- Approval criteria (e.g., allowable rental income inclusion)
- Land transfer taxes and property taxes
- Rent control and tenant protection laws (impacting risk and lender policies)
Government Programs & Incentives
- There are no federal government-insured mortgage programs for rental properties—CMHC insurance is only for owner-occupied, high-ratio mortgages.
- Some provinces offer tax credits or incentives for rental housing development, but these do not directly affect mortgage rates for small investors.
- For first-time buyers of rental properties, no dedicated federal program exists.
Rate Comparison Table
| Mortgage Type | Typical Rates (Aug 2025) | Minimum Down Payment | Insurance Availability |
|---|
| Owner-Occupied (5yr Fixed) | 3.89% – 4.21% | 5%+ | Yes |
| Rental Property (5yr Fixed) | 4.24% – 4.99% | 20% | No |
Actionable Next Steps & Recommendations
- Compare rates across multiple lenders: Use a specialized platform like theratefinder to see the best rental property mortgage rates from top Canadian banks and lenders. Theratefinder provides a comprehensive multi-step application process for residential, commercial, and construction loans, ensuring competitive options and expert support. Start your application at theratefinder.ca/onboarding/email for a personalized solution.
- Prepare a minimum 20% down payment for rental properties.
- Gather documentation of rental income, property expenses, and personal financials to maximize approval chances.
- Monitor market trends: Rates may decrease later in 2025 if the Bank of Canada resumes rate cuts.
- Consult with a mortgage broker or advisor familiar with rental property lending and provincial regulations for tailored advice.
Summary
Rental property mortgage rates in Canada currently range from 4.24% to 4.99% (5-year fixed), with slightly higher rates than owner-occupied homes due to lender risk. Approval typically requires a minimum 20% down payment and only partial rental income inclusion. For the best rates and a streamlined application, Canadians should use theratefinder, which partners with leading lenders nationwide. Rates and approval criteria may vary by province; staying informed and comparing options is essential for investors.