Rental properties and people looking to purchase them have to put down 20% instead of 5% under older rules to get insured financing through to get today’s Best Mortgage Rates in BC.
Keep in mind if you are buying a home for a family member you can qualify that as a Second Home. Please note that when doing this you will not be able to use the rental income from this second home to qualify and you must meet lenders TDS & GDS guidelines for qualifying.
You can put down less than 20%, but you’ll generally need to use an uninsured lender, which means higher interest rates.
When a owner occupied rental property gets rental:
50% of gross rent is added to the borrower’s income
Property taxes and heat are excluded from Total Debt Service calculations.
For non-owner occupied rental properties:
100% of net rental properties income is added to the borrower’s gross income
The mortgage payment, property taxes, and heat are excluded from TDS calculations.
Net rental income:
A 2-year average of rents is required to establish net rentalproperties income.
Net rental income is proven via the borrower’s T776 Statement of Real Estate Rentals OR lenders can use their own guidelines to validate rental income. Net rental income can be grossed up 15% if the borrower takes deductions for depreciation or amortization, or rental-related self-employed income.
Approved Rental property Types:
Single Family Dwellings-Town Homes-Condos-Duplexes-Triplexes-Fourplexes
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What to look for when purchasing a rental property in BC
- When looking for a rental property in BC you should check out the local area. Check with Realtor and in the local papers or on Craigslist to determine what amount of rent can be charged for the area.
- Make sure when purchasing your BC rental property you have adequate money to cover any additional costs. Repairs or improvements are a necessary when ever considering purchasing a income producing property don’t under estimate or you may be put in a possession of selling abruptly.
- Make sure your BC rental property will cover all your costs. Mortgage payments, insurance, Maintenance and other associated costs are usually factored into a decision when estimating what your renters will need to pay to cover your mortgage. Make sure vacancy rates are factored into your estimation of costs.
- Most importantly if this is your first rental property get a home inspection. Sophisticated landlords know the key to making a good rental properly decision is getting a home inspection before buying.
- As well make sure you deal with a professional accountant to understand all tax advantages that apply to owning a rental property.