What is the minimum down payment for non-owner occupied properties?

The minimum down payment for non-owner occupied properties, such as rental properties and investment properties, is 20%. This requirement is in place because lenders typically view non-owner occupied properties as higher risk compared to owner-occupied residences. When a buyer purchases an investment property, they are less likely to prioritize mortgage payments over personal living expenses, which can lead to a greater chance of foreclosure if financial difficulties arise.

The 20% down payment threshold allows lenders to mitigate this risk, as a larger upfront investment indicates a stronger financial commitment from the buyer. Additionally, putting down 20% or more often means the buyer can avoid the costs associated with mortgage default insurance, which is typically required for down payments of less than 20% on owner-occupied homes.

This policy aims to ensure that buyers are financially stable enough to handle the associated responsibilities of investment properties, making it a crucial aspect of mortgage lending guidelines in Canada.