Explore down payment rules, rental income treatment, and cash-flow planning with Stephanie Karulas (Mortgage Agent Level 1, Mortgage Architects #12728).
Multiple lenders
No hidden fees
24-hour replies
Your goals matter
Multiple lenders
No hidden fees
24-hour replies
Your goals matter
An investment property can be non-owner-occupied (you don't live there) or owner-occupied with rental suites (e.g., a duplex where you live in one unit, or a home with a legal basement apartment). Properties with 1-4 units typically qualify for residential mortgage financing.
Typical down payment requirements for non-owner-occupied purchases are higher than for primary residences. Insured default programs generally focus on owner-occupied properties. Stephanie will explain current guidelines and help you understand what to expect based on your property type and occupancy plans.
Lenders consider your income, credit, existing liabilities, rental income treatment (add-back or offset), property appraisal, and property type. Qualification is subject to lender guidelines and local by-laws. Stephanie will review your complete financial picture and property details to identify suitable lender options.
Properties with 1-4 units use residential underwriting. Properties with 5+ units may be considered commercial real estate, requiring different financing approaches. Stephanie focuses on 1-4 unit residential investment properties but can refer you to commercial specialists if your property has 5 or more units.
Short-term rental (STR) financing is often handled case-by-case and depends on lender policies and local regulations. You may need to provide booking history, platform statements, municipal STR licenses or permits, and higher down payments. Stephanie will discuss your STR plans and identify lenders who may consider your scenario, while emphasizing the importance of compliance with local by-laws.
From condos to fourplexes, Stephanie helps you understand the financing considerations for each property type.
Financing options tailored for condominium ownership and strata regulations.
Financing for townhomes without condo fees or shared ownership structures.
Flexible mortgage solutions for shared-wall homes.
Financing for single-family homes with approved rental suites for added income.
Mortgage options for two-unit homes, whether owner-occupied or rental.
Ideal financing for small multi-unit residential investment properties.
Understanding add-back vs offset, vacancy allowances, and documentation requirements.
Lenders use different methods to account for rental income in your qualification:
The percentage and method vary by lender. Some use net rent (after expenses), others use gross rent. Stephanie will explain which approach applies to your lender options.
Gross Debt Service (GDS) and Total Debt Service (TDS) ratios measure how much of your income goes toward housing costs and total debt. When rental income is involved, lenders adjust these calculations using add-back or offset methods. There are no universal formulas—each lender has their own policies. Stephanie will model your ratios with different lender approaches to find the best fit.
Lenders typically assume a vacancy rate (e.g., 5-10% of gross rent) to account for periods when the property may be unoccupied. This is a conservative approach to ensure you can cover expenses even if the property isn't always rented.
The vacancy allowance reduces the effective rental income used in qualification. Stephanie's cash flow calculator includes a vacancy field so you can see the impact on your bottom line.
Lenders require documentation to verify rental income:
If your property has a secondary suite, lenders and insurers may require confirmation that it's legal (meets zoning, building code, fire safety, and permit requirements). Illegal suites can affect financing, insurance coverage, and resale value. Stephanie recommends verifying suite legality with your municipality and including documentation in your financing application.
A practical example of house hacking—living in one unit while renting the other to offset mortgage costs. This scenario highlights how rental income, planning, and smart budgeting can make homeownership more affordable.
Sarah purchases a duplex in Hamilton for $650,000. She plans to live in one unit and rent the other for $1,800/month. She has a 20% down payment ($130,000) and good credit.
Because Sarah will owner-occupy one unit, she may qualify for more favorable down payment requirements. The lender uses a rental offset approach, applying 50% of the $1,800 rent ($900) to reduce her housing costs in the GDS calculation. Sarah provides a signed lease and proof of the tenant’s first and last month’s rent.
Sarah budgets for a maintenance reserve (5% of gross rent), vacancy allowance, and separate utility meters. She also confirms with the city that both units are legal and zoned for residential use.
Stephanie helps Sarah model cash flow scenarios and coordinates with her lawyer to ensure all documentation is in order. Sarah closes on time and begins building equity while her tenant helps cover the mortgage.
A look at how non-owner-occupied condo investments work in practice, including higher down payments, rental income treatment, and cash flow considerations. Learn how condo fees, vacancy planning, and long-term strategy impact overall investment viability.
Sarah purchases a duplex in Hamilton for $650,000. She plans to live in one unit and rent the other for $1,800/month. She has a 20% down payment ($130,000) and good credit.
Because Sarah will owner-occupy one unit, she may qualify for more favorable down payment requirements. The lender uses a rental offset approach, applying 50% of the $1,800 rent ($900) to reduce her housing costs in the GDS calculation. Sarah provides a signed lease and proof of the tenant’s first and last month’s rent.
Sarah budgets for a maintenance reserve (5% of gross rent), vacancy allowance, and separate utility meters. She also confirms with the city that both units are legal and zoned for residential use.
Stephanie helps Sarah model cash flow scenarios and coordinates with her lawyer to ensure all documentation is in order. Sarah closes on time and begins building equity while her tenant helps cover the mortgage.
A value-add investment approach where renovation and refinancing unlock new equity for future purchases.This scenario shows how strategic upgrades and rental income can accelerate portfolio growth.
Sarah purchases a duplex in Hamilton for $650,000. She plans to live in one unit and rent the other for $1,800/month. She has a 20% down payment ($130,000) and good credit.
Because Sarah will owner-occupy one unit, she may qualify for more favorable down payment requirements. The lender uses a rental offset approach, applying 50% of the $1,800 rent ($900) to reduce her housing costs in the GDS calculation. Sarah provides a signed lease and proof of the tenant’s first and last month’s rent.
Sarah budgets for a maintenance reserve (5% of gross rent), vacancy allowance, and separate utility meters. She also confirms with the city that both units are legal and zoned for residential use.
Stephanie helps Sarah model cash flow scenarios and coordinates with her lawyer to ensure all documentation is in order. Sarah closes on time and begins building equity while her tenant helps cover the mortgage.
Sarah purchases a duplex in Hamilton for $650,000. She plans to live in one unit and rent the other for $1,800/month. She has a 20% down payment ($130,000) and good credit.
Because Sarah will owner-occupy one unit, she may qualify for more favorable down payment requirements. The lender uses a rental offset approach, applying 50% of the $1,800 rent ($900) to reduce her housing costs in the GDS calculation. Sarah provides a signed lease and proof of the tenant's first and last month's rent.
Sarah budgets for a maintenance reserve (5% of gross rent), vacancy allowance, and separate utility meters. She also confirms with the city that both units are legal and zoned for residential use.
Stephanie helps Sarah model cash flow scenarios and coordinates with her lawyer to ensure all documentation is in order. Sarah closes on time and begins building equity while her tenant helps cover the mortgage.
Michael buys a non-owner-occupied condo in downtown Toronto for $550,000. He plans to rent it for $2,400/month. Condo fees are $450/month, and he has a 25% down payment ($137,500).
As a non-owner-occupied investment, Michael needs a higher down payment. The lender uses a rental add-back approach, adding 70% of the $2,400 rent ($1,680) to Michael's income. Michael provides a signed lease, condo status certificate, and reserve fund study.
The high condo fees significantly impact cash flow. Michael models a 10% vacancy allowance and reviews the condo's rental restrictions (some buildings limit the number of rental units). He also considers his long-term hold strategy and potential for appreciation.
Stephanie helps Michael evaluate whether the cash flow justifies the investment and discusses renewal options. Michael proceeds with the purchase, understanding the importance of tenant turnover management and condo fee increases.
Lisa buys a fixer-upper in Kitchener for $450,000 with a legal basement suite. She plans to renovate, rent the basement for $1,200/month, and refinance after 6-12 months to access increased equity for her next investment.
Lisa starts with a 20% down payment ($90,000) and a purchase mortgage. After renovations, she obtains a new appraisal showing the property is now worth $550,000. She refinances to access the increased equity (up to 80% LTV on the new value), which gives her funds for her next purchase.
Lisa confirms the basement suite is legal (building permit, separate entrance, egress windows, fire separation). She budgets for renovation costs, holding costs during the work, and refinance fees (appraisal, legal, potential penalty if breaking her initial mortgage early). She also splits utilities with her tenant and maintains a maintenance reserve.
Stephanie helps Lisa plan the timing of the refinance and coordinates with her lawyer and appraiser. Lisa successfully executes the BRRRR strategy, accessing $60,000+ in equity to fund her next investment while keeping the Kitchener property as a cash-flowing rental.
Sarah purchases a duplex in Hamilton for $650,000. She plans to live in one unit and rent the other for $1,800/month. She has a 20% down payment ($130,000) and good credit.
Because Sarah will owner-occupy one unit, she may qualify for more favorable down payment requirements. The lender uses a rental offset approach, applying 50% of the $1,800 rent ($900) to reduce her housing costs in the GDS calculation. Sarah provides a signed lease and proof of the tenant's first and last month's rent.
Sarah budgets for a maintenance reserve (5% of gross rent), vacancy allowance, and separate utility meters. She also confirms with the city that both units are legal and zoned for residential use.
Stephanie helps Sarah model cash flow scenarios and coordinates with her lawyer to ensure all documentation is in order. Sarah closes on time and begins building equity while her tenant helps cover the mortgage.
Michael buys a non-owner-occupied condo in downtown Toronto for $550,000. He plans to rent it for $2,400/month. Condo fees are $450/month, and he has a 25% down payment ($137,500).
As a non-owner-occupied investment, Michael needs a higher down payment. The lender uses a rental add-back approach, adding 70% of the $2,400 rent ($1,680) to Michael's income. Michael provides a signed lease, condo status certificate, and reserve fund study.
The high condo fees significantly impact cash flow. Michael models a 10% vacancy allowance and reviews the condo's rental restrictions (some buildings limit the number of rental units). He also considers his long-term hold strategy and potential for appreciation.
Stephanie helps Michael evaluate whether the cash flow justifies the investment and discusses renewal options. Michael proceeds with the purchase, understanding the importance of tenant turnover management and condo fee increases.
Lisa buys a fixer-upper in Kitchener for $450,000 with a legal basement suite. She plans to renovate, rent the basement for $1,200/month, and refinance after 6-12 months to access increased equity for her next investment.
Lisa starts with a 20% down payment ($90,000) and a purchase mortgage. After renovations, she obtains a new appraisal showing the property is now worth $550,000. She refinances to access the increased equity (up to 80% LTV on the new value), which gives her funds for her next purchase.
Lisa confirms the basement suite is legal (building permit, separate entrance, egress windows, fire separation). She budgets for renovation costs, holding costs during the work, and refinance fees (appraisal, legal, potential penalty if breaking her initial mortgage early). She also splits utilities with her tenant and maintains a maintenance reserve.
Stephanie helps Lisa plan the timing of the refinance and coordinates with her lawyer and appraiser. Lisa successfully executes the BRRRR strategy, accessing $60,000+ in equity to fund her next investment while keeping the Kitchener property as a cash-flowing rental.
A simple, transparent process designed to guide you through every step of your mortgage journey—from understanding your options to securing the right solution with confidence.
We start with a no-obligation conversation to understand your goals, timeline, and financial situation. This typically takes 20-30 minutes and can be done by phone, video, or in person.
Timeline: Same day or next business day
I'll review your documents, compare lender options, and create a personalized mortgage strategy with rate recommendations and a clear timeline.
Timeline: 2-5 business days
I submit your application, manage underwriting, and coordinate with your lawyer and real estate agent to ensure a smooth closing. I remain available for questions and future mortgage needs.
Timeline: 5-10 business days for final approval
Common questions about financing rental properties in Ontario.
For non-owner-occupied investment properties, down payment requirements are typically higher than for primary residences. While insured mortgages (with less than 20% down) generally focus on owner-occupied properties, investment properties often require at least 20% down. Requirements vary by lender and property type. Stephanie can review your specific situation and explain current guidelines.
Lenders may use rental income through ‘add-back’ (adding a percentage of gross rent to your income) or ‘offset’ (reducing your liabilities by a portion of the rent). The percentage and method vary by lender and may depend on whether you have existing leases, market rent from an appraisal, or a history as a landlord (T776 tax forms). Stephanie will explain which approach applies to your scenario.
Common documents include: signed lease agreements, T776 tax forms (if you’re an existing landlord), corporate financial statements (if you own rentals through a corporation), appraisal with market rent schedule, and proof of deposits. Requirements vary by lender. Stephanie will provide a detailed checklist based on your property and lender options.
A legal secondary suite typically meets municipal zoning, building code, fire safety, and permit requirements. Legality matters because lenders and insurers may require confirmation that the suite is compliant. Illegal suites can affect financing, insurance coverage, and resale value. Stephanie recommends verifying suite legality with your municipality and including it in your financing discussion.
Condo fees are a monthly expense that reduces your net operating income and cash flow. High fees can make a property less profitable, especially if they increase over time. When evaluating a condo investment, review the reserve fund study, recent fee increases, and any special assessments. Stephanie can help you model cash flow with realistic fee assumptions.
A vacancy allowance is a percentage of gross rent that accounts for periods when the property may be unoccupied. Lenders often assume a vacancy rate (e.g., 5-10%) when calculating net rental income. This is a conservative approach to ensure you can cover expenses even if the property isn’t always rented. Stephanie will explain how different lenders treat vacancy in their calculations.
It depends on the lender and your situation. Some lenders use the lower of your actual lease or the appraiser’s market rent estimate. Others may rely solely on the appraisal if you don’t have a lease in place. If you’re an existing landlord with a track record, your T776 tax forms may also be considered. Stephanie will clarify which approach applies to your lender options.
Existing landlords typically provide T776 tax forms (Statement of Real Estate Rentals) from the past 1-2 years, along with supporting documents like leases, bank statements showing rent deposits, and property tax bills. If you own rentals through a corporation, you’ll provide corporate tax returns and financial statements. Stephanie will guide you through the documentation process.
Short-term rental (STR) financing is more complex and policy-dependent. Lenders may require evidence of STR income (booking history, platform statements), proof of municipal compliance (STR licenses or permits), and higher down payments. Some lenders don’t finance STRs at all. Stephanie will discuss your STR plans and identify lenders who may consider your scenario.
Properties with 1-4 units are typically financed as residential mortgages with standard underwriting. Properties with 5+ units are often considered commercial real estate and may require commercial financing, which involves different qualification criteria, down payments, and terms. Stephanie focuses on 1-4 unit residential investment properties but can refer you to commercial specialists if needed.
Yes, refinancing after renovations (often called a ‘BRRRR’ strategy—Buy, Renovate, Rent, Refinance, Repeat) can allow you to access increased equity based on the improved property value. You’ll need a new appraisal, and the refinance will be subject to current lending guidelines and qualification. Stephanie can help you plan the timing and documentation for a post-renovation refinance.
Rental properties typically require landlord insurance (also called non-owner-occupied property insurance), which covers the building, liability, and loss of rental income. It’s different from homeowner’s insurance. Your lender will require proof of insurance at closing. Stephanie recommends discussing your insurance needs with a licensed insurance broker to ensure adequate coverage.
A common rule of thumb is to set aside 5-10% of gross rental income for maintenance and repairs, though this varies by property age, condition, and type. Older properties or those with more systems (e.g., pools, elevators) may require higher reserves. Stephanie’s cash flow calculator includes a maintenance reserve field so you can model different scenarios.
It depends on your lease agreement and property type. In single-family homes, tenants often pay utilities directly. In multi-unit buildings or condos, landlords may pay some or all utilities and property taxes, then factor those costs into the rent. Your lease should clearly specify who pays what. Stephanie’s cash flow calculator lets you input landlord-paid expenses to see the impact on your bottom line.
Using borrowed funds (like a HELOC or second mortgage) for your down payment is possible but policy-dependent. Some lenders allow it, while others require that a portion of the down payment come from your own resources. Borrowed down payments increase your overall debt load, which affects qualification. Stephanie will discuss your down payment sources and lender options.
Co-signers or guarantors may be considered on a case-by-case basis, depending on the lender and the property. Some lenders are more flexible than others. A co-signer’s income and credit can help you qualify, but they also take on liability for the mortgage. Stephanie will explain how co-signers work and whether it’s a viable option for your scenario.
Timelines vary based on property type, documentation completeness, appraisal scheduling, and lender processing times. A typical purchase can take 30-60 days from offer acceptance to closing, though refinances may be faster. Stephanie will provide a realistic timeline based on your specific situation and keep you informed throughout the process.
If the appraisal is lower than the purchase price, you may need to increase your down payment or renegotiate the price. If the appraiser’s market rent estimate is lower than your lease, the lender may use the lower figure, which could affect your qualification. Stephanie will help you understand the implications and explore options if values or rents don’t meet expectations.
Yes, this is called an owner-occupied investment property. You may benefit from lower down payment requirements (similar to a primary residence) while using rental income from the other unit(s) to help qualify. This is a popular strategy for first-time investors. Stephanie will explain how rental income is treated in owner-occupied multi-unit scenarios.
Rental income is taxable, but you can deduct eligible expenses like mortgage interest, property taxes, insurance, maintenance, and depreciation (capital cost allowance). Tax rules are complex and vary by situation. Stephanie provides mortgage guidance, not tax advice, and recommends consulting a licensed accountant or tax professional to understand your specific tax obligations and benefits.
Contact Stephanie Karulas to review your financing options and get started.
