How Much Down Payment for a Rental Property?

The down payment is the biggest hurdle to buying your first rental. The rules are different from a home you live in: for a pure investment property in Canada, lenders typically require at least 20% down, because mortgage default insurance isn't available on non-owner-occupied rentals. Here's exactly what to budget and the ways smart investors lower the bar.

Key takeaways

• Non-owner-occupied rental properties typically require a minimum 20% down payment.
• Mortgage default insurance (CMHC) generally isn't available for pure investment properties.
• If you live in one unit of a 2–4 unit property, lower insured down payments can apply.
• Closing costs, the stress test, and cash reserves all add to what you actually need up front.
• HOMEH gives eligible buyers the industry's highest Cashback Rebate — which can help fund your down payment.

The typical rule: 20% down on a rental

When you buy a property purely as an investment — you won't live in it — Canadian lenders typically require a minimum 20% down payment. The reason is structural: mortgage default insurance (the CMHC-style coverage that lets owner-occupiers buy with as little as 5% down) generally isn't offered on non-owner-occupied rentals. Without insurance, lenders take on more risk and require a larger cushion of equity.

Treat 20% as the typical floor, not a guarantee. Some lenders ask for 25%–35% on certain property types, and terms vary by lender, location, and your financial profile. Always confirm the current requirement with your lender or broker.

How that compares to a home you live in

The gap between a rental and an owner-occupied home is significant. For a home you live in, the minimum down payment in Canada starts at just 5% (on the first $500,000). On a rental, you typically need four times that share up front.

Want to model your own numbers? The HOMEH down payment calculator lets you compare scenarios in seconds.

The exception: house hacking a multi-unit

There's a well-known workaround. If you live in one unit of a property with up to four units, it counts as owner-occupied — which can open the door to insured financing and a much smaller down payment on the whole building. This "house hacking" approach lets first-time investors get in with far less cash while tenants help cover the mortgage.

Owner-occupied multi-unit

Because you live on-site, a 2–4 unit owner-occupied property can qualify for insured financing with a smaller down payment than a pure rental. Rules and limits change, so confirm current terms with your lender before counting on it.

Don't forget the rest of the upfront cash

The down payment is the headline number, but it's not the whole bill. To close on an Ontario rental you'll also need:

You'll also need to pass the mortgage stress test, qualifying at the greater of your contract rate plus 2% or 5.25%. Build that into your budget so an approval doesn't fall through.

Funding the down payment

Twenty percent on an Ontario property is a large number, so investors get creative: tapping home equity through a HELOC, partnering with a co-investor, or saving aggressively over time. Whatever route you take, run the full purchase through our guide on buying your first rental property first, and make sure you understand your duties in our walkthrough on how to become a landlord in Ontario. Once you're scaling up, see how investors fund the next purchase in our guide to building a real estate portfolio.

Put cashback toward your down payment

Eligible HOMEH buyers receive the industry's highest Cashback Rebate on an investment property — real money that can go straight toward the 20% you need. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting. Estimate yours with the cashback calculator.