Definition
Financing an income property differs significantly from a primary residence. Lenders require a **minimum 20% down payment** on all income properties — SCHL/Sagen/Canada Guaranty insurance is only available for owner-occupied properties of 1 to 4 units.
Rental income is integrated into ratios in two ways:
1. **Add-back method**: 50% to 80% of gross rental income is added to the borrower's income. Favourable for well-rented multiplexes. 2. **Offset method**: rental income directly offsets the property's charges (mortgage + taxes + fees) in ratio calculations.
For buildings of 5+ units, the rules change fundamentally: the project's EBITDA (rental income minus operating expenses) is the basis, and financing often goes through commercial lenders.
Non-Canadian residents buying a rental property face additional rules (withholding tax on rental income, residential purchase ban).