Lower Sackville
Investment property mortgages in Nova Scotia
One question decides the file: will you live in it? Both answers, the down payment and how the rent counts, worked on a $400,000 duplex.
How much do I need down to buy a rental property in Nova Scotia?
20% if you will not live in it, $80,000 on a $400,000 duplex: government-backed insurance has not covered non-owner-occupied property below 20% since April 19, 2010, so there is no premium. 5% if you live in one unit ($20,000), insured, with up to 100% of the other unit’s rent added to your income.
The same duplex, both ways
Lenders do not ask “is this an investment?” but “will you occupy it?” Not living there: the mortgage is uninsured at 80% of the price or less, no CMHC premium, the lender’s own rental-income policy.
- $80,000 down (20%)
- No insurance premium
- Cash to close $87,625
- $20,000 down (5%)
- $15,200 premium added to the mortgage
- Cash to close $27,625
Both include 1.5% deed transfer tax and $1,625 of legal, recording and title costs.
Living in one unit: CMHC treats a two-unit home like a house, up to 95% financing; three and four units go to 90%. The premium is added, the price must be under $1,500,000, amortization caps at 25 years.
| Line | Rented out (20% down) | You live in one unit (5% down) |
|---|---|---|
| Down payment | $80,000 | $20,000 |
| Mortgage insurance premium | none | $15,200 at 4%, added to the mortgage |
| Mortgage amount | $320,000 | $395,200 |
| Deed transfer tax (1.5%) | $6,000 | $6,000 |
| Legal, recording, certificate, title (typical) | $1,625 | $1,625 |
| Cash to close | $87,625 | $27,625 |
The cash gap is $60,000; the trade is the premium, a larger mortgage, and living there at purchase. Many first rentals in Nova Scotia start that way; the occupancy rule is about the day you buy. A few municipalities charge 1.0% or 1.25% → · The payment on either mortgage →
Where the arithmetic works differently
Entry prices decide whether a small multi-unit carries itself, and Nova Scotia’s spread is wide. Cape Breton and the Southwest have the province’s lowest regional averages, which is where a lender’s minimum loan amount starts to bind before the rent does. Halifax and Dartmouth are the opposite problem. Student rental demand concentrates around Wolfville, Antigonish and Halifax, and a house rented by the room is underwritten as an investment property whatever it looks like from the street.
Go deeper
The detail, if you want it
How the rent counts, and the stress test
An add-back adds a percentage of the gross rent to your income before the ratios run; an offset subtracts it from the carrying cost instead, which usually helps a tight file. Insured and owner-occupied, the percentages are CMHC’s: up to 100% on a duplex, 50% on three or four units.
On an uninsured rental each lender sets its own unpublished percentage and method, which is why the same duplex can be a decline at one lender and an approval at another. Bring the lease or a realistic market rent with comparables so the lender is chosen first.
Every federally regulated lender then qualifies the mortgage at the greater of the contract rate plus 2% and 5.25%, GDS and TDS tested after the rent is counted; CMHC’s insured caps are 39% and 44%.
Lenders also want the down payment as your own or gifted money, and any rentals you already own carried at the same rate. A pre-approval that states the rate it was stressed at →
What lenders ask about Nova Scotia small multi-units
- Legal units. Many Nova Scotia two- and three-unit houses are conversions; the lender wants fire separation, egress and, where required, a permit history. An unpermitted basement suite is usually treated as a single-family home; its rent may not count.
- Separate services. Separate meters and heat sources make rent easier to prove and expenses easier to model; one oil furnace heating three units needs explaining.
- The usual Nova Scotia conditions. Oil tanks, wood stoves without a WETT report, knob-and-tube wiring, well and septic apply as to a home, and insurers are stricter on tenanted property. The full list, on the purchase page →
- The tax bill after you buy. The capped assessment resets to market value on sale, so the seller’s property tax is not yours, and the lender models the higher figure. How the cap works →
- Tenancies in place. Leases carry over under the Residential Tenancies Act; the lender wants them in writing, and a unit you intend to occupy must be lawfully vacant on closing.
How it works
From first call to keys, in four steps
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A 15-minute call
You say what you’re trying to do and roughly what you earn.
Riley tell you the price a lender will support, the cash you need to close, and what to fix first.
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Documents and pre-approval
You send the short list through a secure upload link.
Riley package the file and come back with a pre-approval letter and a rate held 90 to 120 days.
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Lenders, side by side
You read the comparison and pick.
Riley place one application with banks, credit unions and monolines, and show you every answer.
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Approval, lawyer, keys
You sign with your own local lawyer.
Riley hold the lender, appraiser and lawyer to the closing date.
Why a broker
Licensed, independent, paid by the lender
- Licensed in Nova Scotia Associate broker 3001134, verifiable on the provincial register
- $0 broker fee On a standard residential mortgage the lender pays, not you
- Banks, credit unions, monolines One application, one credit check, placed with the lender that reads your file best
- Every part of the province Bedford office, remote process: Yarmouth to Sydney, the same four steps
Questions people ask
Can I buy a duplex with 5% down in Nova Scotia?
Yes, if you live in one unit. CMHC insures owner-occupied one- and two-unit homes to 95% of the price, and three- and four-unit homes to 90%, so 10% down. The premium is added to the mortgage.
Does rental income count toward qualifying?
Yes; how much depends on the file. On an insured owner-occupied duplex CMHC allows up to 100% of the gross rent to be added to your income; three- and four-unit homes, up to 50%. On an uninsured rental each lender sets its own unpublished add-back or offset percentage.
Do rental properties pass the stress test the same way?
Yes. Every federally regulated lender qualifies you at the greater of the contract rate plus 2% and 5.25%, on the new mortgage and any others you carry, after the rent is added or offset. A property that only works at the contract rate does not qualify.
Where does a five-unit building go?
To the commercial side. Five or more units means different lenders, CMHC MLI Select rather than homeowner insurance, and underwriting on the building’s income, at Indi Mortgage Commercial Division, where Riley also advises. Four units and under stays here.
Still unsure? Ask me directly.
If your question isn't here, your situation is probably specific. Fifteen minutes on the phone beats reading another page, and nothing is pulled on your credit.
(902) 298-0218 · Monday to Friday, 8:00 am to 10:00 pm Atlantic
Have a listing in mind?
Send it, and you get back the down payment under both rule sets, how the rent counts, the deed transfer tax and cash to close, in writing within a business day.
(902) 298-0218 · Monday to Friday, 8:00 am to 10:00 pm Atlantic