Mortgage For Investment Property - Rental & Investment

What Is an Investment Property Mortgage?

An investment property mortgage is a loan used to purchase a property for rental income or investment purposes rather than as your primary home. In Calgary, lenders may consider your income, credit history, down payment, existing debts, property value, and potential rental income when assessing your application. The right mortgage can help investors finance a rental property while building long-term equity.

Calgary Investment Property Mortgage Requirements

• Minimum Down payment: A minimum down payment of 20% is required for non-owner occupied properties. For multi-unit or higher-risk properties, a minimum of 25% is required. If one plans to live in a single unit, they may qualify with as little as a 5-10% down payment.
• Credit Score: A strong credit score is essential and a score of more than 680 is preferred by lenders.
• Debt Service Ratio: Gross Debt Service should generally be below 39%. The total debt service should not exceed 44%.
• Rental Income Consideration: Lenders consider 50 – 80% of expected or actual rental income. Some lenders use the Debt Service Ratio requiring a minimum of 1.2 for non-owner occupied properties. It means net rental income should be at least 20% higher than debt payments.
• Mortgage Insurance: CMHC insurance is not available for non-owner-occupied properties. It is available only if the owner lives in the property and it has 1-4 units.
• Reserve Funds: Some lenders require 6-12 months of mortgage payments as reserves.
• Documentation: Proof of income, property appraisal, lease agreements and tax documents are commonly needed.

These requirements can vary slightly by lender. ManpriitPabla will help you understand the requirements for specific lenders helping you make informed decision.

Types of Investment Properties We Finance

Rental Houses

A rental house is a common choice for Calgary investors. You purchase the property and rent it to tenants, using the rental income to help cover the mortgage and other property expenses.

Duplexes and Triplexes

Duplexes and triplexes have two or three separate living units. They can be a good option if you want to generate rental income from multiple tenants while investing in one property.

Fourplexes

A fourplex contains four separate residential units. It can provide multiple sources of rental income, although mortgage requirements and qualification rules may differ from those for a single-family rental property.

Multi-Unit Residential Properties

These properties contain several rental units under one property. They are generally suited to investors looking to build a larger rental portfolio and generate income from multiple tenants.

Condo Investment Properties

Buying a condo as an investment allows you to rent out the unit and potentially earn monthly rental income. Condos can be attractive to investors because they often require less property maintenance than a detached home.

Secondary Suites and Basement Suites

A home with a legal secondary or basement suite can provide an additional source of rental income. Investors can live in one part of the property while renting the other, or rent out both units depending on their plans.

Vacation and Recreational Properties

Vacation properties, such as cabins or recreational homes, can be purchased for personal use and rental income. Financing may depend on how the property is used, its location, and the lender's requirements.

Commercial Investment Properties

Commercial investment properties include buildings or spaces purchased to generate rental income from businesses. These properties typically have different financing requirements than residential investment properties and may require a larger down payment.

Key features

Some key features of an investment property mortgage include:

• Financing specifically designed for rental and investment properties

• Down payment requirements that may differ from a primary residence

• Potential to use rental income when qualifying

• Fixed and variable mortgage options

• Financing available for different types of investment properties

• Terms and rates based on your financial situation and the property

• Options for investors looking to purchase additional rental properties

How to Get an Investment Property Mortgage in Calgary 

Getting an investment property mortgage starts with understanding your budget and investment goals. You'll generally need to provide information about your income, credit, existing debts, down payment, and the property you plan to purchase.

A typical process includes:

1. Review your finances: Check your income, credit, debts, and available down payment.

2. Get pre-approved: A pre-approval can help you understand how much you may be able to borrow.

3. Choose an investment property: Find a property that fits your budget and investment strategy.

4. Submit your mortgage application: Provide the required financial and property documents.

5. Property and lender assessment: The lender reviews the property and your overall application.

6. Finalize the mortgage: Once approved, you can complete the purchase and arrange your mortgage funding.

Investment Property Mortgage vs. Regular Mortgage