Clients often ask if they need a 20% down payment to buy another home, and the answer is, 'it depends'.
If they are purchasing a property for rental or investment purposes, then yes, they'll typically need a minimum 20% down payment.
However, if they are converting their current home into a rental property and buying another home for themselves to live in, they can put down a minimum again.
One program that many overlook is how to buy a second home with as little as 5% down.
Here's how it works:
The property needs to be owner-occupied, meaning they or immediate family members will use it.
It must make sense, such as a second home in a different city for work, leisure, or family to live in. Lenders will be vigilant if it seems like they are trying to use this program to buy a rental property without a 20% down payment.
The purchase price needs to be under $500,000 to qualify for 5% down or under $1 million for the minimum down payment.
Hypothetical rental income (or Airbnb income) cannot be used to qualify since the property is for owner-occupied use only. Even if family members are renting from them, the rent won't be considered. This means they have to qualify for both their first home and this new second home without rental income.
For more information contact
Jayden Backs
BRX Mortgages
403-370-9020
jayden@jaydenbacks.ca