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Updated over 5 years ago on . Most recent reply

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Jasmine May
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If I have 20% down, would banks lend me money for the rest?

Jasmine May
Posted

Sorry if this appears naive. I live in the UK and we are moving to Canada shortly. I'm asking to make sure my assumption is right as this is pretty fundamental to my plans! 

I will not have any credit history in Canada to begin with. I will also not have a job! (I'll be setting up a RE business - cash flow will be my income). If I put 20% down, would banks lend me the rest based on rental potential ALONE or do they need to see some kind of personal income for me? 

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David Steinbok
  • Rental Property Investor
  • Toronto
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David Steinbok
  • Rental Property Investor
  • Toronto
Replied

Man, I wish I could take my 500k and buy 10 rental properties, but it doesn't quite work like that. Jacob is right in what he is saying. Sure on paper, it says you can buy a house with 20% down, but you need credit history and a stable income to pay for your mortgage on the house. Then based on your income and debt ratios, the bank decides how much is the maximum mortgage debt you can have. Let's say you make 100k a year at your job, and can qualify for 1mil total in mortgages. Then you can get 4 houses. Great.  The banks also only could rental income as passive income, and only count a % of that. Not sure exactly what it is off the top of my head. Then there are some banks that only allow you to have 5 or six mortgages at a time. Also as others on here can confirm, in southern Ontario you will be hard pressed to find too many houses for 250k. So your 500k will more than likely get you 3 or 4 houses. Dave

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