# QUESTION: What down payment is required when using Rental Property?

> Down payment requirements are a critical aspect of mortgage qualification, influenced by factors like Loan-to-Value (LTV) ratio and the property's intended use.

Category: Investor
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/investor/question-what-down-payment-is-required-when-using-rental-property

## Answer
Here's a table summarizing typical down payment scenarios. Note that these can change based on market conditions, so confirm before quoting to any client.

| Property Type | LTV Limit | Minimum Equity | Source of Down Payment |
|---|---|---|---| 
| **1-2 Units** | Up to 95% | 5% of the first $500,000 + 10% of the remainder of the lending value | Savings, sale of property, non-repayable financial gift |
| **3-4 Units** | Up to 90% | 10% | Savings, sale of property, non-repayable financial gift |
| **Rental Property (Non-Owner Occupied)** | Up to 80% | 20% | Savings, sale of property, non-repayable financial gift |

For instance, a first-time buyer purchasing a duplex and living in one unit can often qualify with a smaller down payment compared to purchasing a pure investment property. Owner-occupancy brings advantages!

## Institutional highlights
- Your lender will want to confirm your down payment comes from your own savings.
- If someone gifts you the down payment, you'll need a letter confirming it's truly a gift, not a loan.
- Using borrowed money for your down payment can make it harder to get approved.
- Your lender will carefully assess the property's value to determine your loan-to-value ratio.
- In hot markets, lenders might use more cautious estimates of your property's value.

## Related guide
- https://ratellow.com/guides/rental-income-offsets

## Sources
- Property value used for the LTV ratio — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017
- Guarantors and co-signors of mortgages — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.3.2
- Footnotes — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026