Buying a Vacation Property or Rental? Here’s What Lenders Look For

Tanya Toye • June 24, 2026

Owning a vacation home or an investment rental property is a dream for many Canadians. Whether it’s a cottage on the lake for family getaways or a rental unit to generate extra income, real estate can be both a lifestyle choice and a smart financial move. But before you dive in, it’s important to know what lenders look for when financing these types of properties.


1. Down Payment Requirements

The biggest difference between buying a primary residence and a vacation or rental property is the down payment.

  • Vacation property (owner-occupied, seasonal, or secondary home): Typically requires at least 5–10% down, depending on the lender and whether the property is winterized and accessible year-round.
  • Rental property: Usually requires a minimum of 20% down. This is because rental income can fluctuate, and lenders want extra security before approving financing.


2. Property Type & Location

Not all properties qualify for traditional mortgage financing. Lenders consider:

  • Accessibility: Is the property accessible year-round (roads maintained, utilities available)?
  • Condition: Seasonal or non-winterized cottages may not meet standard lending criteria.
  • Zoning & Use: If it’s a rental, lenders want to ensure it complies with municipal bylaws and zoning regulations.

Properties that fall outside these norms may require financing through alternative lenders, often with higher rates but more flexibility.


3. Rental Income Considerations

If you’re buying a property with the intent to rent it out, lenders may factor the rental income into your mortgage application.

  • Long-term rentals: Lenders typically accept 50–80% of the expected rental income when calculating your debt-service ratios.
  • Short-term rentals (Airbnb, VRBO, etc.): Many traditional lenders are cautious about using projected income from short-term rentals. Alternative lenders may be more flexible, depending on the property’s location and your financial profile.


4. Debt-Service Ratios

Lenders use your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios to determine if you can handle the mortgage payments alongside your other obligations. With investment or vacation properties, lenders may apply stricter guidelines, especially if your primary residence already carries a large mortgage.


5. Credit & Financial Stability

Your credit score, employment history, and overall financial health still matter. Since vacation and rental properties are considered higher risk, lenders want reassurance that you can handle the additional debt—even if rental income fluctuates or the property sits vacant.


6. Insurance Requirements

Rental properties often require specialized landlord insurance, and vacation homes may need coverage tailored to seasonal or secondary use. Lenders will want proof of adequate insurance before releasing mortgage funds.


The Bottom Line

Buying a vacation property or rental can be exciting, but financing these purchases comes with extra rules and considerations. From higher down payments to stricter property requirements, lenders want to be confident that you can handle the responsibility.


If you’re considering a second property, the best step is to work with a mortgage professional who can compare lender requirements, outline your options, and find the financing that works best for you.


Thinking about making your dream of a vacation or rental property a reality? Connect with us today.


Tanya Toye

Mortgage Broker

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Deposit vs. Down Payment: Key Differences for Homebuyers

By Tanya Toye • September 23, 2026
When you’re buying a home, two terms often cause confusion: deposit and down payment . While they’re related, they serve very different purposes in the homebuying process. Here’s what you need to know. What Is a Deposit? A deposit is the money you provide when you make an offer on a property. Think of it as a show of good faith that proves you’re serious about purchasing. How it works : Typically, you provide a certified cheque or bank draft that your real estate brokerage holds in trust. If your offer is accepted, the deposit remains in trust until the deal moves forward. If negotiations fall through, the deposit is refunded. Connection to your down payment : Once the sale is finalized, your deposit becomes part of your total down payment. Why it matters : The amount is negotiable, but a larger deposit can make your offer more attractive in a competitive market. Keep in mind, however, that if you back out after conditions are removed, you risk losing your deposit. What Is a Down Payment? Your down payment is the amount you contribute toward the purchase price of your home when securing a mortgage. Minimum requirement : In Canada, the minimum down payment is 5% of the home’s purchase price. Anything less than 20% requires mortgage default insurance. Sources : Down payments can come from your savings, the sale of another property, RRSP withdrawals (through the Home Buyers’ Plan), a gift from family, or even borrowed funds. Example: How They Work Together Imagine you’re buying a $400,000 home with a 10% down payment ($40,000). When you make your offer, you provide a $10,000 deposit . Once conditions are met, that deposit is transferred to your lawyer’s trust account. At closing, you add the remaining $30,000 to complete your full down payment. The lender provides the rest—$360,000—through your mortgage. The Bottom Line Your deposit shows commitment and secures your offer, while your down payment is what makes the mortgage possible. Together, they work hand in hand to get you into your new home. 📞 If you’d like clarity on deposits, down payments, or any other part of the mortgage process, let’s connect. I’d be happy to walk you through it step by step.
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Self-Employed? Let’s Get You Qualified for a Mortgage

By Tanya Toye • September 16, 2026
Being self-employed comes with plenty of advantages, including the ability to structure your business how you choose and claim expenses to reduce your taxable income. But, when it comes time to apply for a mortgage, those same tax strategies can sometimes make qualifying more complicated. One of the first considerations is how your business is structured. There can be differences in how lenders assess income for someone who is incorporated compared with someone who operates as a sole proprietor or partnership. Depending on the lender and the circumstances, income may be reviewed using personal tax returns, corporate financial statements or a combination of documents. Another important factor is the level of business write-offs you claim. As a business owner, reducing your taxable income can make good financial sense. However, a lower reported income can also mean a lower qualifying income when a lender assesses your mortgage application. This can create a frustrating situation where you may have strong cashflow and the ability to comfortably afford the mortgage, but your tax returns don’t necessarily tell the whole story. That doesn’t automatically mean you need to start declaring significantly more income and paying substantially more to the CRA just so you can qualify for a mortgage. Alternative mortgage solutions may be a great option Depending on your circumstances, there may be alternative mortgage solutions available that take a broader view of your financial situation. Some lenders have different approaches to self-employed income and may be able to consider additional documentation or alternate methods of demonstrating your ability to repay the mortgage.  This can create an important financial decision for self-employed borrowers. Is it more beneficial to pay additional taxes to show a higher income or consider a mortgage option with a higher interest rate that may allow you to qualify based on your existing financial structure? There isn’t a one-size-fits-all answer. The right approach depends on your income, business structure, financial goals, credit profile, down payment and how long you expect to be in that mortgage. The key is to have the conversation before you make changes to how you report your income. A mortgage broker who understands self-employed borrowers can help you explore your options and compare the potential costs of different approaches. Instead of assuming you need to change the way you run your business to qualify for a mortgage, it may be worth looking at the lending solutions available to you first. Being self-employed shouldn’t automatically make getting a mortgage more difficult. It just means your mortgage strategy may need to be as individual as your business. Let’s discuss your options. 604-788-8693 | tanya@tanyatoye.ca