London & Southwestern Ontario
Investment Property Mortgage in London, Ontario
London's rental demand is driven by Western University, Fanshawe College, the hospital network and steady in-migration from more expensive Ontario markets. That makes the math work more often than many buyers expect — but lender rules for rentals are stricter than for owner-occupied homes.
Nandan Bajani · Mortgage Agent Level 1 | Ontario · The Mortgage Firm Inc.
Down payment and qualification basics
A non-owner-occupied rental generally requires at least 20% down, and mortgage default insurance is not available for pure rental purchases.
Two- to four-unit properties where you occupy one unit can qualify with less down under insured programs, which is why owner-occupied duplexes are a common first step for London investors.
How lenders treat rental income
There is no single rule.
Some lenders add a percentage of gross rent to your income; others use a rental offset that subtracts a portion of rent from the property's expenses; others apply a debt coverage ratio test on the property itself.
The same file can qualify at one lender and fail at another purely because of which method is used — this is the main reason to compare lenders on rentals rather than default to your own bank.
Cash flow inputs to model honestly
Cash flow inputs to model honestly
- Mortgage payment at the stress-test rate, not just today's rate
- Property taxes, insurance (higher for rentals) and utilities you cover
- Vacancy allowance and turnover costs
- Repairs, maintenance and capital reserve
- Property management if you're not self-managing
Student rentals near Western and Fanshawe
Student rentals near Western and Fanshawe
Per-room student rentals can produce strong gross rent, but lenders scrutinize them: some will not lend on rooming-house configurations, and the City of London licenses residential rental units in certain categories.
Confirm zoning, licensing and lender appetite before you firm up an offer.
Building a portfolio
Building a portfolio
Most prime lenders limit the number of financed properties per borrower.
Past that point, alternative lenders and commercial-style underwriting take over. Structuring the first two or three purchases with the fourth in mind avoids a stall later.
Related reading
Questions people ask
How much down payment for a rental property in London?
Generally 20% minimum for a non-owner-occupied rental. Owner-occupied two- to four-unit properties may qualify with less under insured programs.
Will the rent help me qualify?
Usually some of it will, but how much depends entirely on the lender's rental income method.
Can I refinance my home to buy a rental?
Often yes, up to 80% of your home's appraised value, subject to qualifying on the combined obligations.
Are rates higher on rental mortgages?
Typically there is a rate premium compared to owner-occupied mortgages, and it varies by lender.
Can I buy a two- to four-unit property with less than 20% down?
If you'll live in one of the units, yes: the minimum is generally 5% for a one- or two-unit property and 10% for three or four units, with mortgage insurance. If you won't live there, rental properties need at least 20% down.
Do I need landlord experience to get a rental mortgage?
Not for a single rental or a small owner-occupied multi-unit. Some lenders do prefer experience, or a larger down payment, for bigger or more complex rental files.
Does a basement apartment help me qualify?
It can, if the unit is legal. Lenders count part of the expected rent, and the share depends on the lender and insurer. An unregistered suite may not be counted, so check its status before you rely on the income.
Run the numbers on your next London rental
A short conversation is usually enough to know what's realistic. No obligation, no pressure.