Underwrite your own deal first
Qualification and investment quality are different questions. Build a conservative cash-flow view with vacancy, repairs, management, insurance, property tax, utilities, condo fees and financing. Leave room for rate and maintenance surprises.
How rent may be counted
Lender methods vary. Some use a percentage of gross rent; others compare eligible rent with mortgage and property expenses. Existing leases, market-rent appraisals and tax documents may be required. The method can materially change qualification.
Questions to answer before an offer
- Down payment source
- Expected rent evidence
- Vacancy assumption
- Repairs and capital reserve
- Property tax and insurance
- Condo or utility costs
- Ownership structure
- Exit and renewal plan
Converting a home to a rental
If you are moving and keeping the current property, both the existing and new mortgages need to be considered together. Notify insurers and lenders, and obtain tax advice about the change in use.
Common investor questions
Is 20% down always enough?
No. It is a common starting point for a typical non-owner-occupied residential rental, but property type, units, condition, location and lender policy can require more.
Can projected rent help me qualify?
Often, with acceptable evidence and subject to the lender’s calculation method. Do not assume 100% of advertised rent will be used.
Should I buy personally or through a corporation?
That is a legal, tax and financing decision. Corporate ownership can narrow lender options. Speak with an accountant and lawyer before structuring the purchase.