Choosing the right mortgage product for your investment property can mean the difference between positive cash flow and bleeding money every month. But with so many options—fixed vs variable, A lender vs B lender, short term vs long term—how do you know which one actually fits your situation? For a personalized assessment of which LendCity financing program is right for you, we’ve created a detailed program comparison guide. extractedKeywords:
- mortgage products
- investment property
- fixed rate mortgage
- variable rate mortgage
- A lender
- B lender
- CMHC MLI Select
- multifamily financing
- residential mortgage
- mortgage strategy
- amortization
- mortgage term
- investment property financing
- cash flow
- portfolio growth contentSummary: >- This comprehensive guide helps Canadian real estate investors navigate critical mortgage product decisions including fixed vs variable rates, A vs B lenders, and CMHC MLI Select options. It provides a decision framework showing how rate type, lender selection, insurance options, term length, and amortization interact to impact investment success and cash flow. semanticThemes:
- mortgage product selection
- cash flow optimization
- risk management
- investment strategy alignment
- lender qualification requirements linkableTopics:
- fixed vs variable rates
- CMHC MLI Select
- multifamily financing
- B lender qualification
- mortgage penalties
- refinancing strategy
- portfolio scaling
- rental property cash flow
- amortization options
- mortgage term selection idealIncomingAnchors:
- choosing the right mortgage product
- investment property mortgage options
- compare mortgage products for investors
- fixed vs variable for rental properties
- A lender vs B lender guide
- mortgage product decision framework
- how to select investment mortgage
- mortgage options for real estate investors qualityScore: 85 enrichedAt: ‘2026-02-07T21:39:26.140Z’
Choosing the right mortgage product for an investment property is one of the most consequential financial decisions you’ll make as a real estate investor. The wrong choice can cost thousands over the life of the loan, reduce cash flow, or limit your ability to grow your portfolio.
Yet many investors spend more time picking paint colors than comparing mortgage products. That’s a mistake.
This guide walks through the major mortgage product decisions you’ll face when financing investment properties in Canada, helping you understand the trade-offs and match products to your specific strategy.
The Core Decision Framework
Every investment property mortgage involves several interconnected decisions. Understanding how they relate to each other prevents making choices in isolation that conflict with your overall strategy.
| Decision | Options | Key Trade-off |
|---|---|---|
| Rate type | Fixed vs variable | Predictability vs potential savings |
| Lender type | A lender vs B lender | Best rates vs easier qualification |
| Insurance | CMHC MLI Select vs conventional | Lower rate (5+ units) vs simpler process |
| Term length | Short vs long | Flexibility vs rate security |
| Amortization | 25 vs 30 years | Lower cost vs better cash flow |
These decisions interact. Choosing a B lender affects your rate options. Choosing CMHC MLI Select for multifamily affects your amortization and rate options. Your portfolio size affects which lenders will work with you. And the property type—single-family rental versus multifamily building—changes which products are even available.
Fixed vs Variable Rate Mortgages
This is the decision that gets the most attention, and it deserves careful analysis.
When Fixed Rates Make Sense
Fixed rate mortgages lock your interest rate for the entire term. Your payment stays exactly the same every month regardless of what happens to interest rates.
Fixed rates work well when you need payment predictability for cash flow planning, when rates are historically low and likely to rise, or when your cash flow margins are thin and a rate increase would push you into negative territory.
The downside: fixed rates typically start higher than variable rates, and breaking a fixed mortgage early triggers larger penalties. If you might sell or refinance before the term ends, those penalties matter. For a deeper comparison, read about fixed vs variable rate mortgages for Canadian investors.
When Variable Rates Make Sense
Variable rate mortgages fluctuate with the lender’s prime rate. When rates drop, you pay less. When rates rise, you pay more.
Historically, variable rate borrowers have paid less over time than fixed rate borrowers. That historical advantage reflects the risk premium built into fixed rates—lenders charge more for guaranteeing a rate.
Variable rates work well when you have cash flow cushion to absorb rate increases, when you plan to hold the mortgage to term, and when you believe rates are more likely to decrease than increase.
The Hybrid Approach
Some investors use a mix: fixed rates on properties with tight margins and variable rates on properties with strong cash flow. This balances predictability where you need it with potential savings where you can absorb volatility.
Whether you choose fixed for tight-margin properties or variable for stronger cash flow ones, your rate type shapes everything else — book a free strategy call with LendCity to compare scenarios based on your actual portfolio.
A Lender vs B Lender
The lender you work with affects your rate, terms, and qualification requirements.
A Lenders
A lenders—major banks and credit unions—offer the best rates and terms. They also have the strictest qualification requirements: strong credit scores, proven income, standard property types, and debt ratios within defined limits.
For investors with straightforward financial profiles and fewer than four or five rental properties, A lenders typically provide the best economics.
B Lenders
B lenders accept borrowers who don’t meet A lender criteria. Self-employed investors, those with credit challenges, investors with many existing properties, or those purchasing non-standard properties may need B lender financing.
B lender rates run higher—sometimes significantly—and fees may apply. But access to financing that enables a good deal can justify the premium. Getting a property at a 1% higher rate beats not getting it at all if the deal fundamentals are strong.
When to Accept Higher Rates
The decision isn’t always about getting the lowest rate. Sometimes accepting a B lender rate makes strategic sense if the property’s returns justify the cost, if you plan to refinance with an A lender once your situation improves, or if the alternative is missing an opportunity entirely.
Work with a mortgage broker experienced with investment properties who can present options across multiple lender types.
Residential vs Multifamily: Different Financing Worlds
The mortgage products available to you depend heavily on whether you’re financing a single-family rental, a small residential property (2-4 units), or a multifamily building with five or more units.
Residential Investment Properties (1-4 Units)
Residential investment properties require a minimum 20% down payment in Canada. You’ll use standard residential mortgage products—fixed or variable, through A or B lenders—with qualification based on your personal income, credit, and debt ratios. Most investors start here.
The qualification process mirrors a personal mortgage: lenders assess your ability to carry the debt based on your employment income and existing obligations. Some lenders use rental income offsets to improve your qualification, but personal income remains the primary driver.
Multifamily Properties (5+ Units)
Properties with five or more units enter commercial mortgage territory. Qualification shifts from personal income to property income—specifically, the property’s Net Operating Income (NOI) and Debt Service Coverage Ratio (DSCR).
This is a fundamental shift. A property that generates strong rental income can qualify for financing regardless of your personal income situation. This is how investors scale beyond the four-or-five property ceiling that personal qualification imposes.
Multifamily financing also opens access to CMHC MLI Select insurance, longer amortization periods, and lenders who specialize in financing multifamily properties.
Once you cross five units, qualification shifts from your personal income to the property’s NOI and debt service coverage ratio — book a free strategy call with us to see if your deal qualifies for CMHC-insured terms.
CMHC MLI Select vs Conventional Financing
For investment properties with five or more units, CMHC offers a program called MLI Select that changes the financing equation significantly.
CMHC MLI Select for Multifamily (5+ Units)
CMHC MLI Select is designed specifically for multifamily rental properties with five or more units. Unlike residential mortgage insurance, this program is built for investors and doesn’t require you to live in the property.
MLI Select uses a points-based system that rewards properties meeting affordability, accessibility, and energy efficiency criteria. The more points your property scores, the better your financing terms—including higher loan-to-value ratios (up to 95% in some cases), longer amortization periods (up to 50 years), and lower interest rates.
For investors scaling into multifamily, MLI Select can dramatically improve cash flow by combining lower rates with extended amortization. A 50-year amortization versus a 25-year amortization reduces monthly payments substantially, even if the rate difference is modest. Learn more about how this program works in our guide to CMHC MLI Select and high-leverage multifamily investing.
Conventional Multifamily Financing
Conventional financing for multifamily properties—without CMHC insurance—typically requires 20-25% down and offers standard amortization periods up to 25 or 30 years. Rates may be slightly higher than CMHC-insured options, but the process is simpler and avoids insurance premiums.
Conventional financing makes sense when your property doesn’t qualify for MLI Select criteria, when you want a simpler approval process, or when the insurance premium outweighs the rate savings for your specific deal.
Choosing Between Them
Don’t just compare rates—compare total cost of borrowing. Factor in the CMHC insurance premium against the rate reduction and extended amortization benefits. On a large multifamily property, the difference in monthly cash flow between a 25-year and 50-year amortization can be the difference between a deal that works and one that doesn’t. Understanding the mortgage stress test and how it affects buying power adds another dimension to this analysis.
Term Length Selection
Mortgage terms in Canada typically range from one to five years, with some lenders offering longer terms.
Short Terms (1-3 Years)
Shorter terms provide flexibility. You can refinance, sell, or restructure sooner without penalties. Rates on shorter terms are often lower than five-year rates.
Short terms suit investors who expect their situations to change—improving credit, increasing income, or planning to sell or refinance. They also work when you believe current rates are temporarily high and want to renew at potentially lower rates.
Long Terms (5+ Years)
Longer terms lock in rates for extended periods. You sacrifice flexibility for certainty. Five-year terms are the most common choice in Canada and offer a balance between security and flexibility.
Long terms suit investors who value payment stability, who have thin margins that can’t absorb rate increases, or who prefer simplicity over optimization.
Amortization Period
The amortization period—how long until the mortgage is fully paid—affects both your monthly payments and total interest paid.
25-Year Amortization
Standard for most mortgages. Balances reasonable payments with manageable total interest costs. Properties pay off within a reasonable timeframe while maintaining acceptable cash flow.
30-Year Amortization
Available for some investment property mortgages, particularly with certain CMHC programs for multifamily properties. Longer amortization reduces monthly payments, improving cash flow. However, you pay significantly more interest over the life of the mortgage and build equity more slowly.
For a detailed comparison, see our analysis of 25-year vs 30-year amortization periods.
Matching Products to Strategy
Your investment strategy should drive your mortgage product selection, not the other way around.
Buy-and-hold investors benefit from longer terms and fixed rates that provide stability. Cash flow predictability matters more than squeezing the last basis point from your rate.
BRRRR investors need shorter terms or flexible prepayment options since they plan to refinance after renovating. Paying a penalty to break a five-year fixed defeats the strategy’s economics.
Scaling investors should consider how each mortgage affects their ability to qualify for the next one. Some products count rental income more favorably than others, affecting your debt ratios and qualification capacity.
Multifamily investors moving into 5+ unit properties should explore CMHC MLI Select for maximum leverage and cash flow. The shift from personal income qualification to property income qualification fundamentally changes your growth trajectory. Understanding how to force appreciation in multifamily properties helps you maximize value under these financing structures.
Frequently Asked Questions
Should I always choose the lowest rate?
How many investment property mortgages can I have?
Can I switch from variable to fixed mid-term?
Does the mortgage product affect my ability to qualify for more properties?
Should I use the same mortgage product across all my properties?
Making Your Decision
The right mortgage product depends on your financial situation, investment strategy, risk tolerance, and portfolio plans. There is no universally best choice—only the best choice for your circumstances.
Work with mortgage professionals who understand investment property financing and can present options across multiple lender types. Run the numbers on several scenarios. Consider how today’s choice affects tomorrow’s options.
The mortgage is a tool. Choose the tool that fits the job you’re trying to do.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Consult a licensed mortgage professional before making any financing decisions.
Written by
LendCity
Published
January 30, 2026
Reading time
10 min read
Fixed Rate Mortgage
A mortgage where the interest rate stays the same for the entire term, providing predictable monthly payments regardless of market changes.
Variable Rate Mortgage
A mortgage where the interest rate fluctuates with the prime rate, meaning your payments or amortization can change over time.
A Lender
A major bank or institutional lender offering the most competitive mortgage rates and terms but with the strictest qualification criteria, including full income verification and stress test compliance. Most investors use A lenders for their first four to six properties.
B Lender
Alternative lenders that serve borrowers who don't qualify with major banks, offering slightly higher rates with more flexible criteria.
CMHC MLI Select
A CMHC program offering reduced mortgage insurance premiums and extended amortization (up to 50 years) for multifamily properties with 5+ units that meet energy efficiency or accessibility standards. Popular among investors scaling into larger apartment buildings.
Amortization
The period over which a mortgage is scheduled to be fully paid off through regular payments of principal and interest. In Canada, common amortization periods are 25 or 30 years, though the mortgage term (when you renegotiate) is typically 1-5 years.
Mortgage Term
The length of time your mortgage contract and interest rate are in effect. Typically ranges from 1 to 5 years in Canada, after which you renew or refinance.
Prime Rate
The benchmark interest rate set by banks, which influences variable mortgage rates. It typically follows the Bank of Canada's overnight rate.
Mortgage Stress Test
A federal requirement to qualify at the higher of your contract rate +2% or the benchmark rate (around 5.25%). For investors, rental income can be used to offset this calculation, though lenders typically only count 50-80% of expected rent.
Down Payment
The upfront cash payment when purchasing a property. For 1-4 unit investment properties, minimum 20% down is required. 5+ unit multifamily can use CMHC MLI Select with lower down payments, and house hackers can put as little as 5% down on owner-occupied 2-4 plexes.
LTV
Loan-to-Value ratio - the mortgage amount expressed as a percentage of the property's appraised value or purchase price (whichever is lower). An 80% LTV means you're borrowing 80% and putting 20% down. Lower LTV generally means better rates and terms.
DSCR
Debt Service Coverage Ratio - a metric that compares a property's net operating income to its mortgage payments. A DSCR of 1.25 means the property generates 25% more income than needed to cover the debt. Lenders typically require a minimum DSCR of 1.0 to 1.25 for investment property loans.
Coverage Ratio
A measure of a property's ability to cover its debt payments, typically referring to DSCR. Commercial lenders often require a minimum of 1.2, meaning the property's net operating income exceeds debt payments by at least 20%.
NOI
Net Operating Income - the total income a property generates minus all operating expenses, but before mortgage payments and income taxes. Calculated as gross rental income minus vacancies, property taxes, insurance, maintenance, and property management fees.
CMHC Insurance
Mortgage default insurance from Canada Mortgage and Housing Corporation. For 1-4 unit investment properties, investors must put 20%+ down (no insurance available). However, CMHC offers MLI Select for 5+ unit multifamily properties, and house hackers can access insured mortgages with 5-10% down.
Commercial Mortgage
Financing for commercial properties like retail, office, or multifamily buildings with 5+ units, with different qualification criteria than residential mortgages.
Commercial Lending
Financing for commercial real estate or business purposes, typically qualified based on property income (NOI) rather than personal income. Includes mortgages for multifamily buildings (5+ units), retail, office, and industrial properties.
BRRRR
Buy, Rehab, Rent, Refinance, Repeat - a real estate investment strategy where you purchase a property below market value, renovate it to increase value, rent it out, refinance to pull out your initial investment, and repeat the process with the recovered capital.
Cash Flow
The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management.
Appreciation
The increase in a property's value over time, which builds equity and wealth for the owner through market growth or forced improvements.
Equity
The difference between a property's current market value and the remaining mortgage balance. If your home is worth $500,000 and you owe $300,000, you have $200,000 in equity. Equity builds through mortgage payments, appreciation, and property improvements.
Leverage
Using borrowed money (mortgage) to control a larger asset, amplifying both potential returns and risks on your investment.
Multifamily
Properties with multiple dwelling units, from duplexes to large apartment buildings. Often offer better cash flow and economies of scale.
Single Family
A detached home designed for one household, the most common property type for beginner real estate investors.
Refinance
Replacing an existing mortgage with a new one, typically to access equity, get a better rate, or change terms. Investors commonly refinance to pull out capital for purchasing additional properties (cash-out refinance) while retaining ownership of the original property.
Interest Rate
The cost of borrowing money, expressed as a percentage. It determines how much you pay on top of the principal borrowed.
Mortgage Broker
A licensed professional who shops multiple lenders to find the best mortgage rates and terms for borrowers. Unlike banks, brokers have access to dozens of lending options.
Prepayment Privileges
Terms in your mortgage that allow extra payments without penalty, typically 10-20% of the original balance annually. Helps pay off your mortgage faster.
Rental Income
Revenue generated from tenants paying rent on an investment property. Gross rental income is the total collected before expenses, while net rental income subtracts operating costs to show actual profitability.
Energy Efficiency
The effectiveness with which a property uses energy for heating, cooling, lighting, and other functions. Energy-efficient upgrades to rental properties reduce operating costs, increase NOI, and can add significant property value while qualifying for government rebates.
Portfolio Lender
A financial institution that keeps mortgage loans on its own books rather than selling them to insurers or the secondary market. Portfolio lenders offer more flexible qualification criteria, making them valuable for investors who have exceeded conventional lending limits.
Mortgage Insurance Premium
The fee charged by CMHC or other insurers for mortgage default insurance on high-ratio mortgages. The premium is calculated as a percentage of the loan amount and can be added to the mortgage balance or paid upfront.
Forced Appreciation
An increase in property value driven by the owner's actions rather than general market conditions. Strategies include renovations, increasing rents, reducing vacancies, or cutting operating expenses. In commercial real estate, raising NOI directly increases the property's income-based appraised value.
Insured Mortgage
A mortgage backed by mortgage default insurance from CMHC, Sagen, or Canada Guaranty, required when the down payment is less than 20% on owner-occupied properties. The insurance premium (ranging from 2.8% to 4% of the mortgage) is added to the loan. Insured mortgages qualify for lower interest rates because the lender's risk is covered by the insurer.
Uninsured Mortgage
A mortgage without government-backed default insurance, required when the down payment is 20% or more, or for investment properties and refinances. Uninsured mortgages typically carry slightly higher interest rates than insured ones because the lender bears the full default risk. Most investment property mortgages in Canada are uninsured.
Open Mortgage
A mortgage that can be paid off in full or in part at any time without penalty. Open mortgages carry higher interest rates than closed mortgages to compensate for this flexibility. They're useful for borrowers who expect to sell soon, receive a lump sum, or refinance in the near term.
Closed Mortgage
A mortgage with restrictions on how much extra you can pay during the term, typically limited to 10-20% of the original balance per year. Prepaying beyond the allowed amount triggers a penalty (usually three months' interest or the interest rate differential). Closed mortgages offer lower rates than open mortgages in exchange for less flexibility.
Convertible Mortgage
A short-term mortgage (usually 6 months or 1 year) that can be converted to a longer fixed-rate term at any time without penalty. Useful when you expect rates to drop and want to lock in later, or when you need short-term flexibility before committing to a longer term.
Collateral Mortgage
A mortgage registered for more than the actual loan amount — often up to 125% of the property value. This allows borrowers to access additional funds later without paying for a new registration. Most major Canadian banks use collateral mortgages by default. The trade-off is that switching lenders at renewal typically requires a full discharge and new registration, which adds cost.
Hover over terms to see definitions. View the full glossary for all terms.