Vacation Property & Second Home Mortgage Financing

Can I Get a Mortgage When Buying a Second Home?

Owning a second home or vacation property makes sense on a lot of different levels. It can dramatically reduce the cost of vacations, bring your family closer together, be a good investment, and in some cases even generate rental income. With the Canadian Mortgage & Housing Corporation (CMHC) recently revising their vacation property and second home mortgage loan insurance products, it is now easier than ever to finance second homes in Canada.

Vacation Property & Second Home Mortgage CMHC Insurance Features

• Available for one unit owner occupied properties located anywhere in Canada
• Access to all CMHC owner-occupied mortgage loan insurance products
• An individual can be a borrower/co-borrower on a maximum of two owner occupied properties that secure CMHC-insured financing
• No additional underwriting requirements or premium surcharges for a second home – standard product specific premiums apply
• Flexible financing options – single advance progress advances and extended amortization periods are available
• CMHC offers 2nd home 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 Vacation Property & Second Home Mortgage Product Highlights:

Loan Purpose	Purchase (with traditional or non-traditional sources of down payment) New Construction Refinance Purchase or Refinance with Improvements Single and Progress Advances
Loan-to-Value (LTV) Ratio	Maximum LTV varies by CMHC product
Maximum Amortization	LTV > 80%: 25 years, LTV ≤ 80%: 40 years
Occupancy	At initiation, the property that secures a CMHC-insured 2nd home mortgage loan must be intended for occupancy at some point during the year by a borrower; or a relative ofthe borrower on a rent-free basis. Lenders must confirm owner occupancy and maintain the confirmation on file.
Number of Units	One Unit
Maximum Number of CMHC-Insured Second Home Mortgages for Owner-Properties	An individual can be a borrower/co-borrower on a maximum of two owner occupied properties that secure CMHC-insured financing.
Borrower Eligibility	Permanent Residents including newcomers to Canada.
General Property Requirements	The property can be located anywhere in Canada and must be suitable for, and available for, year-round occupancy. Properties that are constructed for seasonal use, or have seasonal access, are not eligible. Properties located on an island must have year-round bridge or ferry access. Time-share interests, life leases and properties in rental pools are not eligible.
General Guideline for History of Managing Credit	Debt service guidelines vary by CMHC product.

 

Owner-Occupied Vacation Property & Second Home Mortgage CMHC Premiums

Loan to Value (LTV) Ratio	Premium on Total Loan Amount	Premium on Increase to Loan Amount for Refinance
Up to and including 65%	0.50%	0.50%
Up to and including 75%	0.65%	2.25%
Up to and including 80%	1.00%	2.75%
Up to and including 85%	1.75%	3.50%
Up to and including 90%	2.00%	N/A
Up to and including 95% Traditional Down Payment*	2.75%	N/A
Up to and including 95% Non-Traditional Down Payment**	2.90%	N/A

 

CMHC Surcharges for Extended and Blended Amortization

Extended Amortization
Add 0.20% for every 5 years of amortization beyond the 25 year mortgage amortization period. Note: After July 9th, 2012, LTV greater than 80% will not be insured for greater than 25 year mortgage amortization.

Blended Amortization
Add 0.50% for a Blended Amortization for Refinance.

 
*Traditional sources of down payment include: 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, equitygrant (non-repayable grant from federal, provincial or municipal agency).  
** Non-traditional sources of down payment include: Any source that is arm’s length to and not tied to the purchase or sale of the propertysuch as borrowed funds, gifts, 100% sweat equity and lender cash back incentives.

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Finding out which solution will work best for you is as easy as contacting us about buying a second home and arranging a second home mortgage. We will help you find the financing that best suits your vacation property mortgage needs!

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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.