Down payment and property type
A non-owner-occupied rental generally requires at least 20% down, and default insurance is not available on it. Owner-occupied properties with up to four units can qualify with less down under insured programs, provided you live in one of the units - a meaningful distinction if you are considering a duplex or triplex.
Lenders also care about the number of units, whether the property is legally zoned for them, and whether existing leases and rents are documented.
How lenders count rental income
Rental offset
A portion of the rent - often 50% to 80% - is subtracted from the property's carrying costs.
Rental add-back
A portion of the rent is added to your income instead, then debt-service ratios are calculated normally.
Debt coverage
Some lenders instead test whether the property's rent covers its own costs by a set ratio.
Documentation
Signed leases, a market rent appraisal, and T776 statements for properties you already own.
Qualifying as your portfolio grows
The first rental is usually straightforward. Somewhere around the third to fifth property, many traditional lenders begin capping exposure regardless of how well the portfolio performs, and files move toward credit unions, monolines or alternative lenders that price for it.
Planning the order of purchases and where each mortgage is placed matters here. Putting every property with the same lender can quietly close doors on the next one.
Costs and risk to budget for
Rates on rental properties are typically higher than on an owner-occupied home, and the stress test still applies. Beyond the mortgage, plan for vacancy, maintenance, property management if you use it, insurance and property tax.
Ontario's residential tenancy rules govern rent increases and ending a tenancy, and the tax treatment of rental income and capital gains is a question for your accountant - this page is mortgage information, not tax or legal advice.
Next step
The online application takes about five minutes. Once it is in, we book a short call to go over your goals, your timeline and the options that actually fit.