Rentals 

A Rental property can be purchased with 20% down. 

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Net worth and some cash liquidity of the applicant are important for a rental, just in case you were without a tenant for even a short period. A great question to ask ourselves too, how would you manage it if you didn't have a tenant for 3 months? 

 

Strong credit is required.  

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So the rent just covers the costs in the application right? 

We can't use 100% of the rental income, every lender has different ways of calculating rental properties but the norm is 50% of the rent can be added back as income to your application. 

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I heard rentals pay more in rate, is that true? 

Yes, in 2016 when the stress test came in lenders also separated rates by down payment, sometimes your credit score and the level of risk. A rental property by nature carries the most risk because its not you, the person being approved, actually living there.  

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Having a rental can be awesome, but it can also be a major headache with the wrong tenant. I would advise getting to know the rules with Landlord + Tenant so you are prepared to successfully run your new rental business.

Link to Alberta Landlord + Tenant