You have likely heard already that more and more Canadians are buying a 2nd home or vacation property. This buying trend has only accelerated since the global pandemic and many experts see this trend continuing well into the future. If you are like me and live in Sherwood Park, AB or nearby Edmonton, AB and often think about how nice it would be to own a 2nd home or vacation property in the mountains, near a lake or simply somewhere different, you’re at the right place.

Questions and Answers

Q: What type of properties are allowed for insured secondary and vacation property financing?

A: There are 2 basic categories of properties:

Type A Secondary Homes

• must be owner occupied or occupied by an immediate family member
• must be accessible year round, a fully serviced property with electricity, permanent heat source, potable water and septic on-site
• should be located in areas with a high level of marketability
• requires permanent foundation (concrete, preserved wood foundations, etc. – sitting on blocks not permitted)

Type B Vacation Homes

• Same as above except the property can be seasonal only access (example: winter road not ploughed during winter)
• The water source does not have to be drinkable but running water is a must

Ineligible Properties

• Rental Pool / Timeshare properties

Q: What is the minimum down payment required to purchase a vacation property or 2nd residence?

A: 5% of the first $500,000 and 10% of the remaining is the minimum down payment required for properties valued under $1 million. To avoid the required mortgage insurance premium charged by CMHC, Sagen, or Canada Guaranty, you will have to put at least 20% down in order to make this a conventional un-insured mortgage. A conventional mortgage is required on any property valued higher than $1M.

Q: What are allowable sources of down payment for vacation and secondary properties?

A: Down payments for Type A properties can be gifted from immediate relatives, or drawn from personal savings, existing home equity, and sale proceeds. For Type B properties, down payments can only come from your own resources. Gifts and borrowed sources are not permitted.

The Q&A above will give you a brief idea of what is possible. If you are ready to really find out how much you can qualify for on a 2nd home or vacation property, check out our quick calculator, apply securely online, or simply give us a call by clicking the button at the top right.