Buy a second home or investment property
A cottage, a rental or a place closer to family: we compare financing from 65+ lenders for your second property purchase.
Start your second-home application →How do you get a mortgage for a second home or rental property?
You qualify for a second property the same way you qualified for your first, except the lender now counts the costs of both homes. How you'll use the property drives the rules: a cottage or second residence for your own use can need as little as 5% to 10% down, while a rental you won't live in needs at least 20%. Equity in your current home can often fund the down payment.
- Personal-use second homes and cottages: from 5% down on qualifying properties with some insured programs; 10%+ with others.
- Rental and investment properties: at least 20% down.
- Lenders count both properties' costs in your debt ratios and may credit part of the rent on a rental.
- The stress test applies: qualify at the greater of your contract rate + 2% or 5.25%.
5–20%
Down payment required
20%
Min down on a rental
50–80%
Of rent commonly counted
+2%
Stress test above contract rate
Types of second property mortgages
Vacation / cottage
5% down possibleRecreational properties require 5–20% down. Some lenders offer cottage programs with flexible qualifications; properties without year-round road access or a permanent heat source usually need more down.
Rental / investment
Use rental income to qualifyInvestment properties need at least 20% down. Rental income (usually 50–80%) can help you qualify for a larger mortgage.
Second residence
Owner-occupied pricingRelocating for work or family? A second home for personal use is often priced closer to a primary-residence mortgage than a rental property is.
Running the numbers on a rental (illustrative)
Assume a $600,000 semi-detached rental bought with 20% down ($120,000), a $480,000 mortgage at an illustrative 5% over a 25-year amortization, and expected rent of $2,800 a month. These are example figures, not current rates or market rents.
Mortgage payment
≈ $2,792/mo
Tax, insurance, upkeep (example)
$725/mo
Monthly cash flow
≈ −$717/mo
Costs here are $400 property tax, $125 insurance and a $200 maintenance and vacancy reserve. At these numbers the property doesn't cover itself, which is common with 20% down in higher-priced markets. Some investors accept that for long-term growth; others put more down or look at a lower price. For qualifying, a lender counting 50% of the rent would add $1,400 a month to your income. Plug your own figures into the mortgage payment calculator, or see how taking equity out of your home could fund the down payment.
How financing a second property works
- 1
Decide how the property will be used
Personal-use cottages and second residences are underwritten differently from rentals, so the use determines the down payment and the lenders available.
- 2
Line up the down payment
Savings, investments or equity from your current home can fund it. If you borrow it against your home, the new payment counts in your debt ratios.
- 3
Qualify with both properties
Lenders include the carrying costs of your current home and the new one, and may credit part of the expected rent if it's a rental.
- 4
Get the property appraised
The lender confirms value and, for recreational properties, checks year-round access, heating and water supply.
- 5
Close and set up insurance
Your lawyer registers the mortgage, and you arrange property insurance that matches how the home will be used.
Planning to pull equity from your current home first? Compare refinancing your mortgage with a home equity line of credit; a refinance gives you a lump sum, while a HELOC lets you draw only what you need. Self-employed? Our guide to self-employed mortgages covers the income documents lenders want.
Frequently asked questions
What buyers ask us before financing a cottage, rental or second residence.
How much down payment do I need for a second home in Canada?
For a second home or cottage you'll live in part-time, some insured programs allow as little as 5% down on qualifying properties with year-round access, and others need 10% or more. Rental and investment properties that you won't occupy need at least 20% down, because they can't use default insurance.
Can rental income help me qualify for a mortgage on an investment property?
Yes. Lenders typically count a portion of the expected or existing rent, commonly 50% to 80% depending on the lender and method, either by adding it to your income or offsetting it against the property's costs. A signed lease or an appraiser's market-rent estimate is usually required.
Can I use equity in my home for the down payment on a second property?
Often, yes. A refinance or home equity line of credit on your current home can fund the down payment, especially for a rental with 20% down. The new borrowing is included in your debt-service ratios, so you need enough income to carry both properties plus the extra debt.
Are rates higher on a rental property than on a second home?
Rental property mortgages often carry slightly higher rates than owner-occupied ones because they are uninsured and treated as higher risk. A second home for your own use may be priced closer to a primary-residence mortgage. Pricing depends on the lender, the property and your file.
Does the stress test apply to a second home mortgage?
Yes. You must qualify at the greater of your contract rate plus 2% or 5.25%, and your debt ratios include the costs of every property you own.
Ready to buy your next property?
We'll find the best rate and structure whether it's a cottage, a rental or a second residence.
Start your second-home applicationBest available rate from 8Twelve's lender panel, subject to qualification and lender approval. OAC. Your rate depends on your individual financial situation.
Related services for second-property buyers
Home equity takeout
Use your primary home's equity for the down payment.
Learn moreMortgage refinancing
Refinance up to 80% of your home's value to free up a lump sum.
Learn moreHome equity line of credit
Draw on a revolving line for a down payment or renovations.
Learn moreConstruction financing
Building a cottage from scratch? Progress-draw mortgages explained.
Learn moreMortgage payment calculator
Estimate the payment on a second property.
Learn more