The 20 Percent Baseline
For most rental properties that will not be owner-occupied, Canadian lenders generally require at least 20 percent down. This is higher than the minimum for an owner-occupied home because insured mortgages are not typically available on pure rental purchases. The exact figure can shift depending on the lender, the property type, and whether you already hold other financed properties.
Owner-Occupied Multi-Unit Exceptions
If you plan to live in one unit of a duplex, triplex, or fourplex while renting out the others, you may qualify for a lower down payment, sometimes as low as 5 to 10 percent depending on the number of units and program used. This is one reason house hacking has become popular among Toronto buyers trying to enter the market.
- Owner-occupied duplex: often 5 percent
- Owner-occupied triplex/fourplex: often higher minimum
- Pure rental, non-owner-occupied: typically 20 percent
Source of Down Payment Funds
Lenders want to see where your down payment is coming from, whether it is savings, an investment sale, a gift, or a line of credit. For rental properties, some lenders are more cautious about borrowed down payments, so it helps to have funds sitting in your account for a reasonable period before applying.
Second and Third Property Rules
As you add more rental properties to your portfolio, some lenders increase their down payment requirements or tighten how much of your rental income they will count. Each additional mortgage also adds to your debt load, which affects how much more you can borrow.
Working With a Broker to Compare Lenders
Down payment rules are not identical across every lender, and mortgage brokers who work with multiple lenders can help you find one whose policies match your situation, whether that means a lower down payment requirement or more flexible rental income rules.
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.