How the property is used affects the financing
- Owner-occupied property
- You live in one unit. Unit count, use and program criteria shape the review; single-family home assumptions do not automatically apply to a plex.
- Fully rented property
- You do not live there. CMHC Income Property covers eligible properties with 2 to 4 units and at least 20% equity, among other conditions and limits. This is not a rule for every lender or property.
- Five or more units, or commercial use
- Different programs and analysis may apply, including property income, expenses, debt coverage and project characteristics.
Source: CMHC — Small rental properties ↗
Look beyond the advertised return
Gather leases, rent actually collected, taxes, insurance, maintenance, owner-paid utilities and management costs. Allow for vacancy, repairs and cash reserves. The rent a lender uses may differ from advertised rent.
Fictional annual example · Not a return forecast
- Gross rent
- $36,000
- Assumed vacancy
- − $1,800
- Operating expenses
- − $12,000
- Income before financing
- $22,200
- Debt payments
- − $18,000
- Repair reserve
- − $3,000
- Balance before tax
- $1,200/year
That is $100 a month under these assumptions alone. An unexpected cost could use up the balance. The vacancy and reserves are not lender standards; income tax, the down payment and acquisition costs are excluded.
Get the property details and documents ready
- Address, price, unit count, intended occupancy and any commercial use.
- Leases, rent roll, actual expenses and property tax bills.
- Purchase agreement, property listing and condition information.
- Source of the down payment and reserves after acquisition.
- Borrower income and debts, ownership structure and other properties.
- Planned work, quotes and timing where relevant.
The lender and property determine what’s needed, from an appraisal and legal review to any additional studies. A rental condo, an owner-occupied duplex and a commercial building won’t all have the same requirements.
If the down payment comes from another property, review the cost of accessing your equity and payments on both properties.
What the calculator can tell you
The residential calculator estimates loan payments from principal, rate and amortization. Its insured-purchase mode assumes an owner-occupied property with 1 or 2 units.
It does not calculate qualifying rental income, debt-service coverage, taxation or commercial financing criteria. For a rental project, use the payment as just one item in your analysis, then have the full structure reviewed. On our first call, we clarify the property type and the figures to gather.
Let’s look at your next investment property.
We’ll look at the property, rental income and expenses to understand which financing options are worth exploring. The lender sets the lending criteria and makes the final approval decision.
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