Definition
Financing for a cottage or vacation property differs according to intended use:
**Secondary residence (personal use)**: - Minimum down payment: 5% if the property is 'four-season' with road access, central heating, and running water. Some lenders require 10-20% for seasonal or isolated properties. - CMHC insurable if down payment < 20% and property meets criteria. - Rates generally slightly higher than primary residence (0.05-0.20% more).
**Rental property (short-term rental, Airbnb)**: - Treated as investment property: minimum 20% down payment. - Airbnb rental income is difficult to have recognized by A-lenders. - B-lenders more flexible but at higher rates.
**Limiting factors**: - Cottage without 4-season road access: some lenders refuse or require 35% down. - Cottage in flood zone: home insurance may be difficult or expensive, which can block financing. - Luxury properties (> $1M): not CMHC insurable.