financing Your investment home

Michelle Feng

Jan 10, 2020

We have summarized some common questions below that we received from our clients about financing for an investment property.

1. Can I get mortgage financing for an investment property if I do not own my principal home?

Yes, you can but there are less lenders that will grant financing on an investment home when the borrower does not own their principal home.

2. How much is the minimum down payment for an investment home?

​Minimum down payment is 20% of the purchase price. If the purchase price is over $1.25 million, most lenders have a sliding scale to reduce the mortgage ratio on the purchase amount that is over $1.25 million.

3. Can I borrow down payment from others?

Yes, you can although most lenders would prefer that you use your own savings or funds borrowed against your existing properties.

4. What are the typical upfront costs associated with acquiring an investment home?

Typical upfront costs include, Property Transfer Tax (in BC), legal fees and appraisal cost (in some cases). If it is new construction, you also need to pay GST on the purchase amount upon closing.

5. Is there any tax advantage for owning an investment home?

Absolutely yes. Upfront closing costs can be deducted from your future capital gain and major renovation expenses can be capitalized and depreciated over the course of time when you own the property. Mortgage interest and ongoing expenses for maintaining the property including property tax, strata fees, insurance, etc. can be deducted from your rental income. The annual loss from your investment property can be further used to reduce your other income reported in your tax return. Check with your accountant to get more current tax advices on this!