Real Estate

Second home mortgage financing

Financing a second home or recreational property is pretty straightforward. Here are some of the general guidelines.

First off, we’re making the assumption that you will likely attempt to maximize the amount of financing you can get on your second home or recreational property.

If it is your intention to obtain mortgage financing greater than 75% of the purchase price, you will require the use of either CMHC or Genworth for mortgage insurance.

In order for a property to qualify as a second home, it must be the intention that the property be occupied at some point during the year by either the borrower or a relative of the borrower on a rent free basis.

A second home is exactly that, a second home. A rental property is not considered to be a second home and would be subject to a different set of qualifications and requirements.

In order to qualify as a second home under the CMHC guidelines, the property must meet the following requirements:

  • The property can be located anywhere in Canada but must be suitable for, and available for year round occupancy.
  • The property must be suitable for year round occupancy. Properties constructed for seasonal use, or have seasonal access are not eligible.
  • Properties located on an island must have year-round bridge or ferry access.
  • The property cannot be a time-share interest, life leases or be in a rental pool.

As far as income qualifications, it’s your income that is required to service the debt. Any rental income that the property would generate will not be considered.

That’s about it… Now keep in mind that these guidelines are based on the assumption that you will be attempting to obtain financing for the property of something greater than 75% of the purchase price(loan to value ratio).

If that’s not the case, it might be possible to find some relaxing of these guidelines depending on the lender.

Looking at financing a second home? Simply complete one of our online mortgage applications and one of our knowledgeable Canada Mortgage Specialists will arrange the mortgage that best suits your requirements.

Talk to one of our Mortgage Specialists today. 

Suggested resources:

Financing a rental property – The in's and out's on financing a rental property in Canada..

Mortgage Glossary – Don’t understand some of the terms used in these articles? Our mortgage glossary provides simple definitions.

Mortgage Calculator - Calculate mortgage payments, amortization schedules, interest costs and more. The more you play with it, the more you’ll see what it can do.

GDS and TDS – Understanding your GDS and TDS is an important part of your borrowing ability.

Canada Mortgage Loan Insurance - Understand everything about mortgage loan insurance.