Down payment and the insured question
A property you will not occupy requires twenty percent down minimum, and there is no default insurance to lean on. Rates on rental mortgages sit above owner-occupied rates. Some lenders want twenty-five percent on small multi-unit buildings.
How rental income is counted
This is where lenders differ most. Some add a percentage of the rent to your income. Some subtract expenses from rent and use the net. Some require a signed lease and a market rent appraisal. The same property and the same buyer can pass at one lender and fail at another purely because of the calculation method.
- Add-back method: a share of gross rent counted as income
- Offset method: rent reduces the property's carrying cost
- Debt coverage method: common on larger multi-unit files
Portfolio limits
Many mainstream lenders cap the number of financed properties per borrower, often around four or five. Past that, alternative lenders and commercial-style lending take over, with different documentation and different pricing. Planning the order you place mortgages in matters more than most investors expect.
Toronto specifics
Rent control rules, licensing for certain rental types, and condo bylaws restricting short-term rentals all affect what the property can earn. Lenders increasingly ask about these. Confirm what the building and the city permit before you write the offer, not after.
Frequently asked questions
- What is the minimum down payment on a Toronto rental?
- Twenty percent for a property you will not live in, and sometimes twenty-five percent on small multi-unit buildings.
- Will the rent help me qualify?
- Usually some of it will, but how much depends entirely on the lender's method. That choice can change your approval amount significantly.
- Is there a limit to how many rentals I can finance?
- Most banks cap financed properties per borrower. Beyond the cap, alternative and commercial lenders take over.