Investment Property Program
If you’re shopping for a real estate investment loan, you’ve come to the right place!
Provides qualified borrowers with the opportunity to purchase an additional investment property with a minimum of 20% down.
Help Borrowers Build Equity as a Landlord The Investment Property Program allows customers to start earning passive income by purchasing properties with 2-4 units.
Will you be living there? If you are planning to live in one of the units of the rental property then this will be considered “owner-occupied” and provides the advantage of requiring a lower down payment. If you do not plan to live in any of the units, this is considered non-owner occupied and you will have to pay a higher down payment.
How much of a down payment do you have? Down payment requirements often serve as the elimination round of whether you are capable of purchasing a rental property or not. Since 2010 Canadians have been required to provide a large down payment when purchasing rental properties.
If you do not plan to live there (non-owner occupied) then your down payment will be a minimum of 20% of the purchase price.
If you do plan to live there (owner-occupied) then your down payment will be 5% of the first $500,000 and 10% of the balance up to a million and then upwards of 20%.
A word of caution, some lenders will allow down payments to be borrowed or gifted while other lenders will not. This is just one example of a fine detail that could collapse a deal at the last minute and another reason why it is important to be particular when shopping for a broker.
Will this be a profitable rental property?
Ultimately lenders are scrutinizing you to protect themselves. They don’t want to loan money to something or someone that is not likely to be profitable. How they determine what qualifies as a good investment or not varies between lenders. Some lenders use the TDSR (Total Debt Service Ratio) to determine if you (and your property of interest) are reliable aka can qualify for a mortgage.
TDSR= total monthly expenses /total monthly income from all sources
One challenge with this equation is that lenders ultimately get to decide how much rent will actually be utilized in this equation. Even if you collect $1000 in rent, your lender may decide that only $600 will be used in the equation, thus impacting the ratio. We can find the best lender