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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Need Funds Between Buying and Selling? Here’s How Deposit Loans & Bridge Financing Help

By Tanya Toye • August 5, 2026
You’ve outgrown your current home. It no longer fits your life, so moving makes sense. And you’re not interested in juggling two properties. Selling first and buying something new feels like the right move. Ideally, you want possession of the new home before leaving the old one. That overlap makes moving easier, reduces stress, and gives you time to paint, renovate, or settle in before the boxes arrive. But there’s a common challenge. What if the down payment for your next home is tied up in the equity of the one you’re selling? That’s where bridge financing comes in. How bridge financing works Bridge financing temporarily unlocks equity from your current home once it has a firm sale . It bridges the gap between selling your existing property and purchasing your next one, allowing you to use that equity toward your down payment. What about competitive markets? In a hot market, a strong offer often means a larger deposit . If you don’t have that cash sitting in your account, but you do have equity, a deposit loan can help you compete with confidence. The non-negotiable requirement To qualify for bridge financing or a deposit loan, your current home must have a firm, unconditional sale . No firm sale = no bridge or deposit loan. Lenders need certainty to calculate available equity and manage risk. Bottom line A firm sale is the key that unlocks bridge financing and deposit loans. If you’re planning a move and want to understand how these options could work for you, let’s talk. I’m always happy to walk you through your options and help you plan your next step with confidence.

When Love & Homeownership Collide

By Tanya Toye • July 30, 2026
Buying a home is one of life’s biggest accomplishments. Finding someone you want to build a future with is another. If you’ve achieved both, congratulations! Owning real estate before entering a serious relationship can provide a strong financial foundation for your future together. However, while no one wants to think about the possibility of a relationship ending, it’s important to understand how your home could be affected if it does. In British Columbia, family property laws can become complex when couples separate. Depending on your circumstances, a home that one partner owned before the relationship may not remain entirely separate property. In some cases, any increase in the property’s value during the relationship or other financial contributions made by a partner could become part of a property division discussion. Factors such as whether you’re married or in a common-law relationship, how long you’ve lived together, whether you’ve combined finances and whether your partner has contributed to mortgage payments, renovations or maintenance can all influence the outcome. This isn’t meant to discourage anyone from building a life together. Rather, it’s a reminder that planning ahead is just as important in your personal life as it is in your financial life. Protecting yourself with a cohabitation or prenuptial agreement One option some couples consider is a cohabitation or prenuptial agreement. These legal agreements can clearly outline how assets, including real estate, would be treated if the relationship ended. Having these conversations early, while they may feel uncomfortable, can provide clarity and help avoid costly disputes down the road. From a mortgage perspective, it’s also worth thinking carefully before making changes to your home’s ownership or mortgage. Adding a partner to the title, refinancing together or using your home’s equity for joint expenses are significant financial decisions that can have long-term implications beyond your monthly mortgage payment. Before making any major changes, speak with both a family lawyer and your mortgage broker. Your lawyer can explain your legal rights and responsibilities under British Columbia law, while your mortgage broker can help you understand how changes to ownership, refinancing or borrowing against your home could affect your financial goals. Protecting the home you’ve worked so hard to purchase doesn’t mean you expect the worst. It simply means you’re making informed decisions about one of your largest investments. If you’re considering adding a partner to your mortgage, refinancing together or simply want to understand your options, I’d be happy to help you navigate the mortgage side of the conversation and connect you with the right professionals as needed. A little planning today can help provide greater peace of mind for whatever the future holds. 604-788-8693 | tanya@tanyatoye.ca