Income and Rental Property Mortgage Financing
Can I Get a Mortgage for an Income Producing Rental Property?
Many Canadians consider the benefits of investing in an income producing rental property, but are unsure of the possibilities available through traditional home mortgage financing. In order to help our Ontario clients and our friends from other parts of Canada, we have outlined the Canadian Mortgage & Housing Corporation (CMHC) Mortgage Loan Insurance Products for income producing rental properties.
CMHC Mortgage Insurance Product Features for Income Properties
- Purchase and Refinance – Loan-to-Value ratios up to 80%.
- No application fee required.
- Streamlined automated processing through emili (an on-line mortgage loan insurance decisioning system).
- Flexible financing options – Single advance, progress advances and extended amortization periods are available.
- CMHC offers mortgage loan insurance premium refunds for homeowners who purchase an energy-efficient home or purchase and make energy-saving renovations to an existing home. See CMHC Green Home for more information.
CMHC Income Property Mortgage Insurance Highlights
| Loan Purpose |
|
| Number of Units | 1- 4 units (no commercial component) |
| Loan-to-Value (LTV) Ratio | Purchase and Refinance – Up to 80% for 1- 4 units |
| Downpayment | Traditional sources of down payment: Applicant’s savings, RRSP withdrawal, funds borrowed against proven assets, sweat equity (< 50% of minimum required equity), land unencumbered, proceeds from sale of another property, non-repayable gift from immediate relative, equity grant (non-repayable grant from federal, provincial or municipal agency) |
| Borrower Eligibility | Permanent Residents including newcomers to Canada, Self-employed borrowers (provided that income is verified through a third party source), Corporate borrowers (must provide a personal guarantee of 100% of the mortgage loan). |
| General Guideline for History of Managing Credit (Credit Score) |
Purchase and Refinance LTV 60.01% – 80%: Minimum score of 580 Purchase and Refinance LTV < 60%: No minimum score required Find your credit score at Equifax.ca or Transunion.ca |
| Debt Service Guideline |
Total Debt Service Ratio Formula = (Principal + Interest + Property Taxes + Heat + 50% of Condo Fees + Other Debt) Divided By (Borrower’s Gross Annual Income + 50% of Gross Rental Income) |
| Loan Security | First or Second Mortgage (Refinance) |
| Max. Amortization | LTV ≤ 80%: 40 years |
| Interest Rate Types | Fixed, standard variable, capped variable, and adjustable |
CMHC Premiums for Non-Owner Occupied Properties
| Loan to Value (LTV) Ratio | Premium on Total Loan Amount | Premium on Increase to Loan Amount for Refinance |
| Up to and including 65% | 1.25% | 2.75% |
| Up to and including 75% | 1.75% | 3.00% |
| Up to and including 80% | 2.50% | 3.75% |
Surcharges for Extended Amortization & Blended Amortization
Extended Amortization
Add 0.20% for every 5 years of amortization beyond the 25 year mortgage amortization period
Blended Amortization
For Portability and Refinance, add 0.50%
Finding out which solution will work best for you is as easy as contacting us about purchasing a second home or vacation property. We will help you determine how to best obtain a home mortgage to finance the vacation property of your dreams!
Please note, all information provided on this page are provided by Home Mortgage Ontario, but should be confirmed by visiting the Canada Mortgage and Housing Corporation (CMHC) website.
Kyle Pearce
Home Mortgage Ontario Agent, M12000636
Phone 519-818-0078
Fax 519-966-6702
Email [email protected]
Office 2985 Dougall Avenue, Windsor, Ontario N9E 1S1
Contact Us and expect a response within 24-hours!
Located in Windsor, Ontario, we specialize in home mortgages of all types in Essex County and across Ontario.
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The Mortgage Centre has decades of experience providing Canadians with mortgage financing through a team of nationwide independent Mortgage Centre offices. Because we’re local business professionals with roots in our communities, we are dedicated to helping our clients make well informed financing decisions.
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