Why Fourplexes Are a Sweet Spot
A fourplex is the largest property type that still typically qualifies for residential mortgage financing in Canada, since the residential and commercial line is drawn at five units. This gives investors four income streams while still accessing residential rates and terms.
Down Payment Requirements
If you plan to live in one unit, you may access a lower down payment than for a pure investment purchase, sometimes requiring a somewhat higher minimum than a duplex due to the increased number of units. If it is a pure rental, expect the standard 20 percent minimum or higher.
How Rental Income Is Assessed
Lenders will typically use a portion of the rental income from the three units you are not living in, or all four units if it is a pure investment purchase, using either an add-back or offset approach depending on the lender and program.
Property Condition and Inspections
Because a fourplex involves more mechanical systems, more units, and often an older building in established Toronto neighbourhoods, lenders may require a more thorough property inspection or appraisal to confirm the building's condition supports the loan amount.
- Multiple units to inspect and appraise
- Age and condition of the building
- Separate metering and unit conditions
Long Term Value of a Fourplex
Beyond the immediate cash flow, fourplexes tend to hold their value well in Toronto due to limited supply of this property type and strong ongoing rental demand, making them a common long term hold for investors building a portfolio.
Frequently asked questions
- Do I need a bigger down payment for this type of property?
- In most cases yes, since lenders view these properties as carrying more risk than a standard owner-occupied home. The exact amount depends on the property type, the lender, and your overall financial picture, so it is worth getting a clear answer before you start shopping.
- Can I use projected rental income before I have a tenant?
- Some lenders will accept a market rent appraisal or lease commitment for this, while others want to see an existing lease in place. Rules vary quite a bit between lenders, which is one reason it helps to work with a broker who can compare options.
- How long does approval usually take?
- Timelines vary based on the complexity of the file and whether extra documentation like appraisals or building permits are needed. Starting the conversation early, before you are under a tight closing deadline, generally leads to a smoother process.