Buying an Investment Property as a First-Time Home Buyer in Canada: What You Should Know

Buying your first home is a big milestone — but what if your first property is an investment property instead of a place you live in?

In Canada, first-time buyers are increasingly exploring real estate investment early to build long-term wealth. While it’s absolutely possible, the rules, financing options, and risks differ significantly from those associated with purchasing a primary residence.

Here’s a clear, practical guide to help you understand “how first-time home buyers can purchase an investment property in Canada”, and what to consider before you move forward.

Can First-Time Buyers Purchase an Investment Property in Canada?

Yes — first-time home-buyers are allowed to purchase investment properties in Canada. However, you should be aware that:

• You may not qualify for certain first-time buyer incentives.
• Down payment and mortgage requirements are usually stricter.
• Lenders assess rental income differently from personal income.

This means planning and expert guidance are essential before applying.

Down Payment Rules for Investment Properties

Unlike owner-occupied homes, investment properties require a higher minimum down payment.

Typical requirements:

• Minimum 20% down payment for non-owner-occupied properties
• Mortgage default insurance (CMHC) is not available for pure rental properties.
• Some lenders may require more than 20%, depending on risk factors.

A mortgage broker can help identify lenders with more flexible policies.

Using Rental Income to Qualify

One advantage of buying an investment property is the ability to use rental income to support your mortgage application.

Lenders typically:

• Include 50%–80% of expected rental income.
• Require a market rent appraisal or lease agreement.
• Apply a rental offset to reduce your debt ratios.

Each lender treats rental income differently — this is where broker access becomes valuable.

Mortgage Rates & Terms for Investment Properties

Mortgage rates for investment properties are usually:

• Slightly higher than owner-occupied mortgages
• More conservative in approval criteria

You may have access to:

• Fixed or variable rate options
• Shorter amortizations
• Different prepayment rules

Shopping around matters more for investment purchases than standard home buys.

Tax Implications You Must Understand

Owning an investment property comes with tax responsibilities.

Key points:

• Rental income is taxable.
• Expenses like interest, maintenance, insurance, and property taxes may be deductible.
• Capital gains tax applies when selling the property.

It’s highly recommended to consult a tax professional before purchasing.

First-Time Buyer Incentives: What You May Miss Out On

If your first property is not your primary residence, you may not qualify for:

• First-Time Home Buyer Incentive (FTHBI)
• Land transfer tax rebates (in some provinces)
• RRSP Home Buyers’ Plan (HBP) for rental use

Rules vary by province and usage — always confirm before proceeding.

Risks to Consider Before Investing

Before purchasing an investment property, consider:

• Vacancy periods and rental demand
• Maintenance and repair costs
• Interest rate fluctuations
• Tenant management responsibilities

A good investment is not just about buying — it’s about long-term sustainability.

How a Mortgage Broker Can Help

Working with a mortgage broker gives you:

• Access to multiple lenders
• Rental-friendly mortgage products
• Better rate negotiation
• Guidance on structuring your first investment purchase

At HomeEase Mortgages, we help first-time buyers explore investment opportunities while avoiding costly mistakes.

Final Thoughts

Buying an investment property as your first real estate purchase in Canada is possible — and can be a smart move when done correctly. The key is understanding the rules, preparing financially, and working with experts who know the market.

If you’re considering this path, professional advice can make all the difference.

Meta title: Buying an Investment Property as a First-Time Home Buyer in Canada | HomeEase Mortgages

Meta description: Can first-time buyers purchase an investment property in Canada? Learn down payment rules, mortgage options, rental income use, risks, and expert tips.

Reference source: https://rates.ca/resources/how-buy-investment-property-first-time-home-buyer-canada