Want to buy rental properties in the US? If you’re Canadian, you’ve probably heard it’s complicated. Good news – it’s actually easier than you think.
Most Canadians hit a wall when they ask their bank about US financing. That’s because banks offer products designed for cottages and vacation homes, not investment properties. If you want a second home in Florida, great – talk to your bank. But if you want to build a rental portfolio? You need different options.
Why US Investment Lending Is Different
Here’s what makes investment-focused lending work better for rental properties:
You don’t need to prove your income. You don’t need a US visa. You don’t even need a US partner (though it can help). The property qualifies itself based on the rent it brings in.
This is completely different from how Canadian banks look at things. They want to see your income, check your debt ratios, and typically only lend if you’re buying in your personal name. Investment lenders don’t care about any of that.
Book Your Strategy CallFive Big Advantages You Need to Know
Let’s break down what makes this work:
No US Visa Required
You can buy investment properties in the US without any special visa. You’re purchasing real estate, not moving there.
No US Partner Necessary
Flying solo works fine. Sure, having a US partner might get you slightly better terms, but it’s not required. You can start without one and refinance later once you’ve built a track record.
No Income Verification
They don’t check your Canadian income. They don’t check your US income. Some lenders might offer better rates if you can show income, but it’s not required.
Property-Based Qualification
The property needs to make sense financially. If the rent covers the mortgage and expenses, you’re good. That’s it.
Unlimited Properties
There’s no cap on how many properties you can buy. Build your portfolio as big as you want.
How the Numbers Actually Work
US lenders use something called a Debt Coverage Ratio, or DCR. Here’s the simple version:
Take the monthly rent. Subtract the mortgage payment. Subtract insurance. Subtract any HOA fees. What’s left over determines if you qualify.
A DCR of 1.0 means the property breaks even – income exactly covers expenses. A DCR of 1.25 or higher? That’s where you get the best rates. Below 1.0 means negative cash flow, which is possible but not smart.
The good news? US properties cash flow well. Finding deals with strong DCR numbers isn’t hard.
What Rates and Terms Look Like
Current rates sit between 7.5% and 9% without any rate buy-downs. With buy-downs (more on this below), you can get as low as 6.375%.
Here’s what affects your rate:
- Down payment size (25% minimum, 30% recommended)
- Loan amount (bigger loans get better rates)
- Debt coverage ratio (above 1.25 is best)
- Location (New York costs more than Texas)
- US credit score (if you have one)
For down payments, most lenders want 30%. You can sometimes get away with 25%, but 30% opens up all your options and gets you the best pricing.
Terms Are Different Than Canada
In Canada, you pick a 5-year term that renews multiple times over your amortization. In the US, the term IS the amortization.
Most investors choose a 30-year term. Some go with 40 years because the lower payments create better cash flow. Both options work.
Here’s another difference: you pick when your mortgage becomes open (no penalty to pay it off). The standard is 5 years, which gives you the best rates. But you can choose 4 years, 3 years, 2 years, 1 year, or even open from day one.
If you’re planning to renovate and refinance quickly, paying a bit more for an open mortgage makes sense. Otherwise, stick with the 5-year option for the lowest rate.
Property Types and Minimums
You can finance properties from one to four units with most lenders. Some lenders go up to eight units. One recently started doing nine-unit properties.
The minimum loan amount is technically $75,000, but you want to aim for at least $100,000. Why? At $100,000, all lenders compete for your business. At $75,000, only three lenders participate. More competition means better rates.
Properties need to be in decent shape. These buy-and-hold lenders don’t want to deal with major renovations. If you’re buying a fixer-upper, use a fix-and-flip lender first, complete the work, then refinance into a long-term mortgage.
Fees and Costs
Total fees run 2% to 3% of the loan amount. This includes broker commission and closing costs. It’s standard for this type of lending.
Some lenders let you add fees to the loan instead of paying them upfront. Others offer zero-fee options with higher rates.
Skip the zero-fee loans. The math never works out. You’ll pay 1% to 2% higher rates to avoid a 2% to 3% fee. You break even in about a year, then overpay every month for the next 29 years. Bad deal.
Instead, use the seller credit strategy below to cover your fees.
The Seller Credit Strategy That Changes Everything
This is the part that can save you tens of thousands of dollars. Pay attention.
In Canada, if a seller gives you a credit, it reduces the purchase price. If you’re buying a $300,000 property and negotiate a $20,000 credit, you now have a $280,000 purchase. Your lender finances the lower amount. You save maybe $20 to $30 per month on your mortgage payment.
In the US, it works completely differently.
You can increase the purchase price to accommodate the seller credit. The seller gives you cash at closing. You still finance the full purchase price. Then you use that cash for a rate buy-down.
Here’s a real example: Take that same $300,000 property with a $20,000 credit. Keep the purchase price at $300,000. Get $20,000 cash from the seller at closing. Use it to buy down your rate by 1% to 1.5%. Now you save $100 to $150 per month, plus thousands in interest over the life of the loan.
Same $20,000 from the seller. Massively different result.
You can also use seller credits to cover your broker fees and closing costs. Or split the credit between a rate buy-down and fee coverage.
How to Negotiate Seller Credits
If the seller won’t budge on price, offer slightly more with a seller credit. They get their number, you get cash for a rate buy-down. Everyone wins.
In a competitive market with multiple offers, offer above asking with a seller credit. Your offer looks stronger to the seller, but you still get the benefit of the rate buy-down.
In softer markets, just ask for a seller credit instead of a price reduction. Most sellers don’t understand the difference and will say yes.
Down Payment Timing Matters
You need to show that your down payment has been in your account for 60 days. That’s better than Canada’s 90-day requirement.
Here’s the critical part: Your down payment needs to sit in a US bank account for 30 days before closing. Not 29 days. Not the day of closing. Thirty days minimum.
This trips people up. Plan ahead. Open a US bank account early and move your money in plenty of time.
Building Your US Credit Score
You don’t need US credit to get your first property. Lenders treat foreign buyers as if they have a 680 credit score.
But if you build US credit over time, you’ll get better rates on your next purchase and on refinances. It’s worth doing once you have your first property.
Real Deal Examples
An eight-unit property (two fourplexes side by side) started with an 8.2% rate quote. After shopping multiple lenders, the rate dropped to 6.375%. That’s a massive difference on a multi-unit property.
A Florida condo for Airbnb use came in at 8.25%, bought down to 7.25% for $9,000. That $9,000 pays for itself in about a year through lower monthly payments.
Even commercial deals work for foreign buyers. A $4.65 million office building in Ohio got $2.25 million in financing at 7% over 25 years with no US partner required.
Bottom Line
US investment property financing is simpler than most Canadians think. You don’t need a visa, a US partner, or income verification. Properties qualify based on rent, not your personal finances.
Focus on finding deals with strong cash flow. Aim for a 30% down payment. Negotiate seller credits and use them for rate buy-downs. Get your money into a US bank account 30 days before closing.
Do these things right and you’ll build a US rental portfolio that cash flows from day one.
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