Mortgage financing for rental properties.
Financing a rental property means more than the purchase price. Lenders look at how the rent is treated, your other properties and your overall debt servicing.
Acquisitions
Financing for one- to four-unit rentals and condos, with the down payment and qualification approach set before you make an offer.
Refinancing
Use equity in an existing rental to restructure debt or fund a purchase, within lender and regulatory limits.
Multiple properties
Some lenders limit how many mortgages or properties they will hold. Planning the order of applications matters.
Try it
Will the rent carry it?
Drag the sliders and watch the money coming in balance against the money going out.
Illustration: 25-year amortization, property tax at 1% of the price a year, $120 insurance, $250 upkeep and 4% of the rent set aside for vacancy. Not a quote or a rate offer.
Each month
−$1,413you top it up
- Mortgage payment$3,490
- Property tax$625
- Insurance$120
- Upkeep or condo fees$250
How might a lender count that rent?
Offset: a share of the rent, often around 80%, is set against the property's own costs. Same rent, different result. Which method a lender uses, and how much it counts, varies. Matching your file to the right one is part of my job.
Down payment
Mortgage default insurance isn't available for rental properties you don't live in, so a non-owner-occupied rental generally needs at least 20% down. If you live in one unit of a two- to four-unit property, insured financing may be possible with a smaller down payment.
How rental income is treated
Lenders count rental income in one of two main ways. With the add-back method, a percentage of the rent is added to your income. With the offset method, a percentage of the rent is subtracted from the property's costs. The percentage and method depend on the lender and the property, and they change how much you can borrow.
Lenders may use existing leases, a market rent appraisal, or both.
Debt servicing across your properties
Lenders review your total debt service: mortgages, property taxes, heating and condo fees on every property you own, plus personal debts. As a portfolio grows, a lender that suits your first rental may not suit your fourth.
What this service doesn't cover
Edi arranges mortgage financing. He does not recommend which properties to buy, assess investment returns or provide financial planning or tax advice. Speak with your accountant or a qualified advisor about those decisions.
Qualification depends on lender underwriting. Rates, terms, fees and penalties vary by lender and are subject to change. Examples are illustrative only and are not a commitment to lend. Content reviewed October 20, 2026. Lending rules change; confirm current requirements before relying on them.
Put the numbers in perspective.
Nominal rate, compounded semi-annually (the Canadian convention for fixed rates).
Estimated monthly payment
$3,320.84
- Effective annual rate
- 4.551%
- Rate per payment period
- 0.3715%
- Number of payments
- 300
- Total interest, if the rate never changed
- $396,251
Illustrative only. Assumes one rate for the whole amortization, while real mortgages renew every few years at the rate available then. Lenders round and schedule payments in their own way. Not a rate offer or an approval.
Include any secured line of credit or second mortgage on the same property.
Loan-to-value
65.00%
- Estimated equity
- $315,000
Lenders use LTV to size the loan and price the risk. Maximum LTVs differ by purpose, property and lender: for example, refinances with federally regulated lenders are generally limited to 80%.
Uses your own value estimate. Lenders rely on their own appraisal, which may be different.
Rental and other property income, less vacancy and operating expenses, before mortgage payments.
Total mortgage payments over 12 months.
Debt service coverage ratio
1.25x
The property's income covers its mortgage payments 1.25 times. Each lender sets its own minimum and calculates income and expenses its own way.
Illustrative only. Lenders underwrite NOI using their own vacancy, expense and reserve assumptions.
Common questions
What is the minimum down payment for a rental property?
For a property you won't live in, generally 20%, because mortgage default insurance isn't available. If you'll live in one of the units of a two- to four-unit property, a smaller down payment may be possible.
Can I use equity in my home to buy a rental property?
Often, yes, through a refinance or a home equity line of credit, within lender limits. Federally regulated lenders generally cap a refinance at 80% of the home's value. The new borrowing must also fit your debt servicing.
Do you finance properties held in a corporation?
Some lenders will lend to a corporation for residential rentals, usually with personal guarantees. Larger properties of five or more units are financed as commercial mortgages.
Related mortgage services
Let's discuss your mortgage.
Whether you're purchasing, refinancing, or reviewing an existing mortgage, start with a conversation about your circumstances and available options.