Four units and under is financed on residential rules. Five and up is underwritten on the property itself. Most brokerages work one side. We work both, and the crossing between them.
Whether this is your first tenant or your fifteenth, the financing question is the same one: what will a lender count, and what will the property have to carry on its own. The answer changes depending on which side of five doors you are standing on, and a lot of investors do not find that out until they are already under offer.
An investor rarely runs one sequence at a time. Usually three or four are moving at once, a refinance funding a down payment while a purchase closes and a renewal comes up. We call those decision points anchor points, and mapping them together is where we start. See the seven.
It is the single most consequential thing to know before you make an offer, and almost nothing about it is obvious. The building can look the same from the street. The financing does not work the same way at all.
Qualified on you, helped by the rent.
Qualified on the building.
Where the real advantage is. Plenty of brokerages are good on one side of that line. Fewer work both, and fewer still are useful in the weeks when a client is deciding which side to be on. A fourplex and a six-unit at the same price are two different financings, and the better buy is often not the one with more doors.
If you are near the line, that alone is worth a call before you write the offer. It is the cheapest conversation in the whole process.
Program parameters shown are illustrative summaries of published CMHC and lender program structures, not offers of financing and not a commitment to lend. Coverage floors, leverage caps, and amortization depend on the program, the property, and lender and CMHC review. Rental income treatment varies by lender and by file.
On anything near the boundary we run the numbers on residential rules and on commercial underwriting, and show you the difference. That is a modelling exercise, not a rate shop, and it usually happens before you have chosen a property.
We model your file against the range of rental income treatments in the market, because that single variable often decides the answer.
For business-for-self borrowers, actual or stated income through the alternative side, structured so it holds up to underwriting.
Refinances and equity take-outs that fund the next down payment, planned against the whole portfolio rather than one property.
Personal, corporate, or a holding company. Each reads differently to a lender and the choice is easier to make before the first purchase than after the fourth.
As part of TMG The Mortgage Group, we reach a broad range of residential, alternative, commercial and CMHC-approved lenders, with private and structured options to review when a file calls for it. Private is one option among many, never the default.
These are the ones that matter on income property. Open, no form, no email address.
What the income supports, and whether coverage or leverage is the binding constraint.
Size a DealThe test lenders run alongside coverage, and the one that binds on aggressive deals.
Check Debt YieldBuild the underwritten NOI on regional benchmarks, then size against it.
Estimate NOIWhich points tier a building reaches, and what that unlocks.
Estimate the TierWhen residential and commercial income sit in one building.
Blend the SizingHow much room you have in what you already own, to fund the next one.
Check Your EquityFive. One to four units is financed as residential, using your personal income with rental income factored in. At five units and above the file moves to commercial multi-unit underwriting, where the property's own net operating income carries it. The building can look almost identical either side of that line; the financing does not work the same way at all.
It varies more than most people expect. Some lenders add a percentage of the gross rent to your income. Others net the rent against that property's own costs and only count the surplus. Two lenders looking at the same duplex can reach materially different answers on what you qualify for, which is why the lender choice matters as much as the rate.
Often yes. Alongside the A lenders there is an alternative side that works from actual or stated income for business-for-self borrowers, with the rationale documented properly rather than asserted. It usually carries a different rate and structure, so it is a trade to weigh rather than an automatic answer. We will show you both.
They are two different financings, and the better buy is often not the one with more doors. A fourplex is qualified largely on you; a six-unit is qualified on the building, which can open insured programs with materially better leverage and amortization but takes longer and asks for more. Worth modelling both before you write an offer.
Frequently, through a refinance or a line of credit. What matters is how the new debt lands in your ratios and whether it improves or hurts your position on the next purchase after this one. We plan that across the portfolio rather than one property at a time.
Each reads differently to a lender and each has tax and liability consequences that are not ours to advise on. What we can tell you is how the choice affects what you can borrow and from whom, and it is far easier to set up before the first purchase than to restructure after the fourth. Speak with your accountant and lawyer on the tax and legal side.
A household moves through its decisions in order. An investor rarely does. A refinance funds a down payment while a purchase closes and a renewal comes due on the property before that. We map them together, because they interact.
Mapping them is the easy half. The harder half is being reachable at the points in between. See how we map the rest of the sequence.
Not sure which of these you are standing on, or how many are running at once? Tell us where you are and we will map out the rest of your anchor points with you.
Map Yours With UsTell us what you own, what you are looking at, and we will tell you which side of the line it lands on.
Mortgage options are subject to lender review, credit review, property review, and supporting documentation. Submission of this form does not guarantee approval or financing.