How much of a down payment do I need for a rental property?

In Canada, a rental property you will not live in generally needs at least 20% down. Default mortgage insurance is designed for homes the owner or a close relative occupies, so if you live in one unit of a small multi-unit home, the lower insured down payments may apply. Lender and insurer rules vary, so confirm with us before you make an offer.

Why rentals generally need 20%

With less than 20% down, a mortgage must be insured against default. Insurance programs are built for owner-occupied homes. A property bought purely to rent out generally cannot be insured, so the lender needs at least 20% equity from day one. Some lenders ask for more on certain property types, such as small condos or properties with several units.

A worked example for a rental condo

These are illustrative figures. You are buying a $600,000 condo to rent out.

• Generally at least 20%: $120,000 down, with a $480,000 mortgage.
• If you were buying the same condo to live in, the federal minimum would be $35,000 (5% of the first $500,000 plus 10% of the remaining $100,000), with an insured mortgage.

The difference, $85,000, is why many first-time investors start with a home they live in and rent part of.

Living in one unit of a rental property

If you buy a house with a rental suite, or a small multi-unit home, and live in one unit, the property is owner-occupied. The insured down payment rules may then apply. The federal minimum is 5% of the first $500,000 of the price, plus 10% of the portion from $500,000 up to $1.5 million, and 20% at $1.5 million or more (source: canada.ca, checked October 2026).

For an insured mortgage, up to 100% of the gross rent from a 2-unit property you live in, or up to 50% from 3–4 units, can count toward your income (source: CMHC, Rental Income, May 2024, checked October 2026).

Insurer rules on the number of units and on multi-unit down payments have their own conditions. We confirm those insurer rules for your property before you rely on them.

Where the money comes from, and qualifying

Lenders want to see where the down payment comes from: savings, the sale of another property, or equity from a property you already own. Many lenders accept borrowed money, such as a HELOC on your home. Borrowed money adds a payment the lender counts against you, and the tax treatment of the interest is a question for your accountant.

You still have to qualify for the rental mortgage. With a federally regulated lender, the qualifying rate is the greater of your contract rate plus 2 percentage points, or 5.25%. Lenders count part of the expected rent using their own methods, which vary. Banks, credit unions and monoline lenders are the first route; alternative lenders may help with larger portfolios or complex income, usually at a higher cost.

What to do next

If you are planning a rental purchase, use our call-me-back form and we will check the rules for that property. You can also estimate payments with the mortgage payment calculator.