Mortgages

With their more lenient qualifying criteria as well as a 5% to 10% down payment requirement, Investment property loans are functionally different from traditional mortgages and provide greater cash inflow. The cost of acquisition of your real estate and the total number of units that it has will both decide how much money you may borrow from a lender.

You must meet a specific set of conditions to qualify for a down payment amounting to less than 20% of your property purchase price. For instance, the house in question should be in a residential location and should comprise no less than one to no more than four dwelling units. Furthermore, it must not cost more than $1 million, and more importantly, you should reside in any one of its units for an entire calendar year at the very least.

We propose that all first-time investors must satisfy each of the aforementioned requirements, and even if you are not able to meet them in entirety, you may still be eligible to apply for a regular mortgage with a 20% down payment requirement. More popularly referred to as house hacking, this strategy allows you to not only utilize one of the dwelling units for personal use but also employ the rest of them to yield a sustainable rental income to repay your debt.

Your loan-to-value (LTV) ratio will be 95% to 90% if you are eligible for a 5% to 10% down payment amount and the lender will treat the investment property in question as your primary residence. Your Financier may or may not allow you to relocate and rent out your dwelling unit after inhabiting the same for one year continuously.

You should also understand that you must religiously adhere to all regulatory guidelines as stipulated by the Canada Mortgage and Housing Corporation (CMHC) since your mortgage default insurance is responsible for providing you with that kind of low down payment.

To suffice, if your potential investment home costs equal to or less than $.05 million, the down payment amount will be 5% of its purchase price, and when the same amounts to anything over $.05 million to no more than $1 million, you will have to pay 10% of the purchase price of the house for the down payment.

Call us now for any queries or further information on investment property loans!