Financing Comparison Tool
for Income Properties
Compare two mortgage scenarios side by side — rate, amortization and down payment — and see instantly which one costs you less. Followed by a complete guide to multiplex financing in Quebec.
Tip: each scenario has its own purchase price — you can compare two different properties. Modify the default price to apply it to both at once.
Scenario A
Least expensiveScenario B
Least expensiveIndicative estimates (principal + interest, Canadian semi-annual compounding). Does not account for taxes, insurance, CMHC fees or lender conditions. Cash flow and DSCR only display when you enter a net income. Consult a mortgage broker for an exact calculation.
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Get an offer →Financing an Income Property in Quebec: The Complete Guide
Financing is the lifeblood of multiplex real estate investment. A well-structured loan can make the difference between a cash-flow-positive property and an investment that costs you money every month. This guide explains, step by step, how to finance the purchase of an income property on the North Shore and throughout Quebec.
Residential or Commercial Loan: The First Key Distinction
The nature of your financing depends first on the number of units in the target property. This threshold, set by financial institutions and CMHC, changes everything: the down payment, rates, amortization and approval criteria.
- 1 to 4 units (residential): residential mortgage financing, often simpler, with lower down payments, especially if you occupy one of the units.
- 5 units or more (commercial / multi-residential): commercial financing, based on the property's profitability rather than your personal income alone. Criteria differ and the CMHC program becomes central.
The Down Payment: How Much Do You Need?
The down payment varies depending on the property type, the program and your profile. Here are general benchmarks for the Quebec market:
| Property type | Typical down payment |
|---|---|
| Plex 1–4 units, owner-occupied | 5% to 10% |
| Plex 1–4 units, investment | 20% |
| 5 units or more, conventional loan | 25% or more |
| 5 units or more, CMHC-insured loan | as little as 5% to 15% |
A CMHC-insured loan often allows a lower down payment and a better rate, in exchange for a mortgage insurance premium. This is one of the keys to acquiring large properties with less capital.
The CMHC APH Select (MLI Select) Program
The APH Select program rewards buildings that improve their energy efficiency, affordability and accessibility through a points system. The more points you accumulate, the more powerful the benefits you access: a loan-to-value ratio of up to 95%, amortization of up to 50 years and a reduced premium. It is a major lever for multiplex investors.
The Debt Service Coverage Ratio (DSCR)
For a commercial loan, the bank is mainly interested in the property's ability to repay its own debt. That is the role of the debt service coverage ratio (DSCR). It is calculated as follows:
DSCR = Net Operating Income (NOI) ÷ Annual Debt Service
A DSCR of 1.0 means the property generates exactly enough to pay its mortgage payments. Lenders generally require a minimum DSCR of 1.10 to 1.30 depending on the program. The higher the ratio, the stronger your file and the more you can borrow.
Interest Rate and Amortization: The Key Trade-Off
Two variables largely determine your monthly payment: the interest rate and the amortization period. The comparison tool above lets you play with these two parameters.
- A longer amortization (30, 40, or even 50 years with APH Select) reduces the monthly payment and improves cash flow, but increases total interest paid.
- A lower rate reduces both the payment and total interest: it is always advantageous, which is why shopping for financing matters.
- In Quebec, mortgage interest is generally compounded semi-annually, which our calculator reproduces for greater realism.
Steps to Obtain Your Financing
Here is the typical process for financing the purchase of an income property:
- 1. Pre-qualification: assess your borrowing capacity and available down payment.
- 2. Property analysis: income, expenses, DSCR, building condition.
- 3. Choosing the structure: conventional or CMHC-insured, amortization, structure.
- 4. Application and documents: leases, financial statements, appraisal, inspection.
- 5. Approval and conditions: lender commitment, conditions to satisfy.
- 6. Notary and disbursement: signing, fund disbursement, title transfer.
Common Mistakes to Avoid
- Underestimating expenses: a DSCR calculated on unrealistic expenses leads to bad surprises.
- Ignoring the total down payment: also account for the welcome tax (land transfer tax), notary fees and a reserve fund.
- Not shopping your financing: a rate or amortization difference changes the outcome radically — test it above.
- Forgetting the APH Select program: for 5 units or more, it can transform the profitability of your project.
- Moving forward without positive cash flow: a property that doesn't self-finance puts you at risk.
Quick Glossary of Multiplex Financing
- LTV (loan-to-value ratio): percentage of the price financed by the loan.
- DSCR: debt service coverage ratio.
- NOI (net operating income): revenues minus expenses.
- CMHC: Canada Mortgage and Housing Corporation, which insures loans.
- APH Select / MLI Select: CMHC's points-based program for multi-residential properties.
- Amortization: total time to repay the loan.
- Term: duration of the current mortgage contract (often 5 years), to be renewed.
20 answers about financing
an income property
For a conventional loan, plan for 25% or more. With a CMHC-insured loan, the down payment can drop to 15%, or even 5% in some APH Select arrangements, in exchange for a mortgage insurance premium.
Up to 4 units, financing is residential and relies primarily on your personal income. From 5 units, it becomes commercial and is based on the property's profitability (net income, DSCR).
It is the net operating income divided by the annual debt service. A DSCR of 1.2 means the property generates 20% more than its mortgage payments. Lenders generally require a minimum of 1.10 to 1.30.
The higher the rate, the higher the payment and total interest. Even a 0.5% difference can represent thousands of dollars per year on a large loan. Test it in the comparison tool above.
A longer amortization reduces the payment and improves cash flow, but increases total interest. A shorter one costs less overall but requires higher payments. The right choice depends on your strategy.
It is a points-based program that rewards buildings improving their energy efficiency, affordability and accessibility. The more points you accumulate, the higher the LTV ratio you can access (up to 95%), amortization up to 50 years and a reduced premium.
Yes, under the CMHC APH Select program, amortization of up to 50 years is possible for eligible properties. This significantly reduces the monthly payment and improves cash flow.
It is a loan whose repayment is guaranteed to the bank by CMHC, reducing its risk. In return, you pay a premium, but you often get a lower down payment, a better rate and a longer amortization.
No. The welcome tax (land transfer duties) is an additional cost, paid after the purchase, on top of the down payment and notary fees. Plan for it in your total budget.
Increase the property's net income (optimize rents, reduce expenses), improve your credit score, reduce your other debts, and consider a partner or an APH Select structure for large properties.
The LTV is the ratio between the loan amount and the property value. An LTV of 80% means a 20% down payment. The higher the LTV, the less capital you tie up, but the higher the risk (and often the premium).
Strongly recommended for multiplex properties. A good broker compares multiple lenders, optimizes your structure (particularly APH Select) and can get you better terms than going directly to your bank.
The amortization is the total time to repay the loan (e.g. 25 years). The term is the duration of the current mortgage contract (often 5 years), after which you renew at market conditions. You go through several terms over an amortization period.
It matters, but less than for a plex. For 5 units or more, the lender evaluates the property's profitability first (NOI, DSCR). Your profile and down payment still matter for reassuring the lender.
It is the money left over after paying all expenses AND the mortgage payment. Positive cash flow puts money in your pocket every month — that is the goal of any good financing structure.
Yes, some programs allow work to be included in the financing, particularly for properties being repositioned. CMHC also offers options for renovations that improve energy efficiency.
No, the tool focuses on principal and interest to compare two scenarios. The CMHC premium, taxes and insurance are added separately and vary by file. A broker will provide a complete calculation.
Count on a few weeks to a few months, depending on complexity, the program (a CMHC file takes longer) and how quickly documents are provided. Preparing a complete file speeds up the process.
Yes. The comparison tool is entirely free, runs directly in your browser and collects no data. You can use it as many times as you like.
No. The comparison tool is for quickly exploring scenarios and understanding the impact of each variable. For a real financing offer, consult a mortgage broker or your financial institution.
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