Vacation and Second Home Mortgage Guide

Owning a second home is a dream for many Canadians — whether it’s a summer cottage by the lake, a ski chalet up north, or a comfortable property for a family member.
This guide explains what’s possible, what’s required, and how we can help you secure the right mortgage strategy for your next property.

How to Buy a Second Property in Ontario

Buying a second property or vacation home follows a similar process to buying your primary residence.
We’ll start by pre-qualifying you, reviewing your income and equity, and developing a clear mortgage strategy so you can begin shopping with confidence.

If you’re buying your next principal residence (not a vacation or family-use property), refer instead to our “Buying Your Next Home” guide.

As mortgage brokers, we work with all lenders and know which ones best suit each type of property — from fully serviced year-round homes to seasonal cottages and family-use dwellings.

Second Home Mortgage Rules in Canada

Lenders group second homes into two main categories, and the rules depend on how the property will be used:

Type A – Year-Round / Fully Serviced:

• Year-round road access
• Permanent heat source
• Safe water supply and septic system
• Suitable for full-time living
  → Can qualify for insured or conventional financing with as little as 5% down.

Type B – Seasonal / Limited Access:

• No winter access, limited utilities, or no permanent heat
  → Must be conventional (uninsured) with 20% or more down.

Most lenders also distinguish between personal-use second homes and rental properties.
To qualify for insured financing, the property must be owner-occupied or occupied by an immediate family member — not rented out or used primarily for income.

Minimum Down Payment for a Second Home in Canada

The required down payment depends on the property type and price:

• Up to $500,000: minimum 5% down
• $500,000–$1,499,999: 5% on the first $500K and 10% on the remainder
• $1.5 million or more: 20% down (cannot be insured)

Example:
A $750,000 fully serviced cottage requires $25,000 (5% of $500K) + $25,000 (10% of $250K) = $50,000 total down payment.

Homes under $1.5 million can be insured, meaning you can put less than 20% down.
Above $1.5 million, a conventional (uninsured) mortgage is required.

If your down payment is under 20%, the mortgage includes default insurance through Sagen or Canada Guaranty (CMHC no longer insures second homes).
“Default” refers to missed payments — the insurance protects the lender, not you.
The premium, generally 2.8% to 4.0% of the mortgage amount, is added to your mortgage.

Note: The new 30-year insured amortization rule introduced in 2024 applies only to first-time buyers and new builds, not to second or vacation home purchases.

Using Equity to Buy a Second Home

The most common and effective way to buy a second property is by using the equity in your current home for the down payment.

We’ll help you evaluate all your options:

1. Refinance your current home – access up to 80% of its value to fund your new purchase.
2. Home Equity Line of Credit (HELOC) – flexible borrowing that can be reused or paid down at any time.
3. Second mortgage – ideal if you want to avoid breaking your current mortgage term.

Accessing home equity is not taxable income. If the new property will be used partly for investment, some of the interest costs may be tax-deductible — we’ll work with your accountant to ensure proper structuring.

If you’re selling one property to buy another, we can also arrange bridge financing to cover the gap between closing dates so you can move smoothly.

Property Use and Lender Considerations

Lenders look closely at how the property will be used:

• Owner-occupied second homes (for your own or family use) qualify for best rates and lower down payments.
• Rental or investment properties require at least 20% down and may have higher rates.
• Recreational properties with limited access or utilities are approved case-by-case and often need a larger down payment.

We’ll match your situation to the right lender so you get the best combination of flexibility, rate, and approval success.

Getting the Best Rate with Dominion Lending Centres

Rates for second homes can vary depending on the lender, property type, and down payment size.

Through Dominion Lending Centres, one of Canada’s largest mortgage brokerages, we access exclusive rate discounts and specialty programs for second-home financing.
We compare all available options — including banks, credit unions, and niche lenders who specialize in cottages and recreational properties.

Over half of all Canadian mortgages are now arranged through brokers.
This gives our clients access to more choice, expert guidance, and personalized support from someone who works for them — not the bank.

We’ll guide you through every step so you can enjoy your new property knowing you’ve secured the best financing available.

Ready to Get Pre-Qualified?

You can start right now.
Click Apply Now to complete your secure mortgage pre-qualification — it takes just a few minutes and won’t affect your credit.

Once submitted, we’ll review your information, confirm what you qualify for, and contact you with clear next steps.
You’ll know your purchase budget, down payment options, and rate choices before you start looking for properties.

Prefer to talk first? Call or email anytime, and we’ll walk you through it personally.

Start your pre-qualification today and take the next step toward owning your second home or vacation property with confidence.

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