Service C- Rental

  • Interest rates and minimum downpayment amounts for rental properties are higher than they are for owner occupied or second homes. 
  • For a rental property, the minimum downpayment is 20%, and could possibly be more, depending on the type and value of property.  (Usually Condos will require higher downpayment). 
  • Usually rental property purchases or refinances require a full appraisal with a schedule of economic rents to confirm the rental income potential of the property. 
  • When you are purchasing your primary residence or a second home, the purchase contract should be written with vacant possession. A purchase contract written to honour existing tenancy agreements could be potentially viewed as a purchase of a rental property, depending on which lender you are working with. If your purchase contract has been written this way and you plan to give notice to the existing tenants, the lender may come back and require the purchase contract be changed to reflect vacant possession. Some lenders are extremely particular about this so if your purchase contract cannot be changed, obtaining an approval through a different lender may be required. 
  • Second home purchases are qualified without the use of rental income. 
  • If it’s a multi-unit property, the second thing to consider is if you, the owner, will be living in one of the units or not. If you will be occupying one of the units, the property would be considered owner-occupied. If all of the units will be rented out, your property would be considered non-owner occupied. The major difference between the two is how much of a down payment you need to make. 
  • If you are purchasing a home with a suite, the home can still be treated as owner occupied, and the rental income can still be used to help with your qualification. 
  • You also have to inform your insurance company is the property is rental.