Buying an Investment Property in Canada
A rental property's returns depend on rent, vacancy, financing costs and expenses. Official data covers the first three.
| Metro | Value |
|---|---|
| Kelowna B.C. | 6.30% |
| Calgary Alta. | 5.00% |
| Kitchener–Cambridge–Waterloo Ont. | 4.20% |
| Barrie Ont. | 4.20% |
| Edmonton Alta. | 3.90% |
| London Ont. | 3.90% |
| Vancouver B.C. | 3.70% |
| Oshawa Ont. | 3.70% |
| Moncton N.B. | 3.70% |
| Hamilton Ont. | 3.60% |
Rental market data
CMHC's Rental Market Survey reports vacancy rates and average rents for purpose-built rentals each October. Low vacancy means fewer empty units; it doesn't guarantee rent growth.
Financing
The 5-year posted rate is 6.19% (Nov 4, 2026). The qualifying rate is the higher of your contract rate plus 2 percentage points or 5.25%. Lenders apply their own rules to rental income and down payments for investment properties, so ask your lender early.
Your debt-service ratios still apply: GDS at most 39% and TDS at most 44%.
What official data doesn't tell you
Condo fees, property taxes, maintenance, landlord-tenant rules and rent controls vary by building, city and province. Check provincial rules before you buy.
Taxes on rental income
Rental income is taxable. You can generally deduct expenses such as mortgage interest (not principal), property tax, insurance and repairs. Capital cost allowance is optional, and claiming it can lead to recapture when you sell. When you sell, the gain is a taxable capital gain because the principal residence exemption doesn't apply.
Financing a rental
Default insurance generally isn't available for a home bought only as a rental, so lenders usually require at least 20% down.
Today's borrowing costs
On new uninsured mortgages, Canadians paid an average of 4.58% (Aug 2026) for fixed terms of five years or more and 3.90% (Aug 2026) for variable rates, according to the Bank of Canada. Insured borrowers paid 4.12% and 3.74%.
The Bank of Canada's policy rate is 2.50% (Nov 11, 2026) and the banks' prime rate is 4.70% (Nov 11, 2026). Variable rates move with prime; fixed rates follow Government of Canada bond yields, with the 5-year yield at 3.46% (Nov 10, 2026).
Frequently asked questions
Where is rental demand strongest?
Low vacancy rates point to tight markets. Compare vacancy and rent growth by metro on our rental rankings before choosing a market.
Sources
Rules are summarized in our own words from official publications. Check the source and talk to your lender or a licensed professional before making a decision.
Informational only, not financial advice. Data as of the release snapshot generated 2026-11-12.