Vacation and Second Homes Mortgages

Mortgages for Vacation and Second Homes

As your family grows, so do your needs. We can take weeks off the process, all for the lowest rate and great terms! With lifestyle demands, a second home in the city to reduce that weekly commute, or a cottage at the lake for weekend getaways can be very appealing. In 2003, CMHC and Sagen introduced a product to make this process more feasible - with as little as 5% down!

Acceptable Loan Purpose

  • Secondary homes (Type A) available for purchase and refinance
  • Vacation homes (Type B) available for purchase only
  • 25/30 - year amortizations available on Secondary (Type A)

*The program does not provide for the purchase of an investment, rental pool or timeshare properties; therefore, incidental rental income will not be used for qualification purposes.

Eligible Properties (Refer to the Property Type Schedule)

Secondary Homes (Type A Properties):

  • Maximum loan amount: - Metro Toronto, Metro Vancouver and Metro Calgary - $700,000; rest of Canada - $600,000
  • Available for purchase and refinance

Vacation Homes (Type B Properties):

  • Property characteristics same as Type A properties except for the following;
  • Property need not be winterized
  • May have seasonal access (road not ploughed during winter)
  • Maximum loan amount: $350,000 (exceptions will be considered on a case by case basis)
  • Available for purchase only

Loan-to-Value Ratio Limits

'Loan-to-value' (LTV) is the relationship between the principal balance of a mortgage and the property value. For example, if you have a house valued at $100,000 with a $90,000 loan, you have a 90% LTV ($90,000 divided by $100,000 = 90%).

  • For A properties, the maximum LTV is 95%
  • For B properties, the maximum LTV is 90%

Borrower Qualifications

  • Maximum TDS: 42%
  • Lenders require a minimum credit bureau score of 680 on all applicants.
  • No prior bankruptcy or judgements
  • No late payments in the last 24 months
  • Maximum of one insured vacation property per applicant
  • No 3rd party guarantors for qualification purposes. Lenders do accept spousal guarantors
  • Lenders do not allow gifted down payments under this program

Document Requirements

  • Offer to purchase
  • Employment/income verification
  • Verification of down payment

Appraisal Requirements

Turnaround times in this program are outside the standard purchase business levels. Property specifications

Type A Property:
  • Foundation must be permanent and installed beyond the frost line. This includes concrete/concrete block or preserved wood foundations certified by a professional engineer or post/pier foundations on solid bedrock
  • Must be zoned and used as residential, rural or seasonal. Lenders do not accept mixed uses or rental pooling
  • Freehold or condominium title. Lenders do not accept co-ops or ? interest ownership
  • At a minimum, the property must have a kitchen, 3-piece bathroom, bedroom, and common area
  • Must have a remaining economic life of at least 5 years more than the mortgage amortization period
  • Year-round road access on reasonable quality public roads, serviced by the local municipality. Lenders also allow privately serviced roads, provided there is a maintenance contract in place
  • The property must be winterized with a permanent heat source. For example, heating can be baseboard, forced air, water radiator, radiant, coal, propane, geothermal heat pumps, or heat pumps
  • Good quality construction with no signs of deferred maintenance
  • Water source: well, municipal serviced, and cistern. The water source must be drinkable. Lenders accept lake or river water, provided the property has its own filtration system. For example, a reverse osmosis system
  • There must be a good market appeal in the area with no adverse influences/neighbourhood nuisances
Type B Property:
  • All Type A property requirements apply to Type B, except for the following:
  • No permanent heat source is required. For example, a wood stove, fireplace, stove or heat blower is acceptable
  • Foundation may be floating. For example, sitting on blocks
  • Seasonal road use is acceptable. This means the road does not have to be plowed during the winter
  • Water source needn't be drinkable. However, there must be running water in the home
  • Property may be accessible only by boat