How to Choose the Right Mortgage Product for Your Investment Property

Compare fixed vs variable rates, A vs B lenders, residential vs multifamily financing, and CMHC MLI Select options for Canadian real estate investors.

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How to Choose the Right Mortgage Product for Your Investment Property

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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.

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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.

Multifamily financing has different rules than residential — book a free strategy call with LendCity and we’ll show you exactly what you qualify for under CMHC or conventional programs.

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.

Apartment buildings require a different lending approach — schedule a free strategy session with us to understand your options before making an offer.

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.

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Frequently Asked Questions

Should I always choose the lowest rate?

Not necessarily. The lowest rate may come with restrictions that cost more than the rate savings. Prepayment penalties, limited portability, or qualification impacts on future properties can make a slightly higher rate the better overall choice. Evaluate total cost and strategic fit, not just the rate number.

How many investment property mortgages can I have?

Most A lenders limit investors to four or five conventional mortgages. Beyond that, alternative lenders, commercial financing, or portfolio lending may be necessary. Each additional property typically faces more scrutiny and potentially different terms.

Can I switch from variable to fixed mid-term?

Many lenders allow conversion from variable to fixed rate during your term, though the fixed rate offered may not be the best available. This conversion option provides a safety valve if rates rise unexpectedly. Check your specific mortgage contract for conversion terms.

Does the mortgage product affect my ability to qualify for more properties?

Yes. Different products treat rental income differently in qualification calculations. Some lenders use offset calculations that credit rental income against mortgage payments, while others use full debt service ratios. The product you choose today affects your borrowing capacity for future properties.

Should I use the same mortgage product across all my properties?

Not necessarily. Different properties may warrant different products based on their cash flow profiles, your plans for each property, and your overall portfolio strategy. A mix of products can balance risk, cost, and flexibility across your portfolio.

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: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

January 30, 2026

Reading Time

9 min read