The jump from 5% to 10% between a duplex and a triplex deserves a clear explanation. For a duplex priced at $600,000, the minimum down payment is calculated as follows: 5% on the first $500,000 ($25,000), plus 10% on the remaining $100,000 ($10,000), for a total of $35,000. For a triplex at the same price, the 10% rule applies from the first dollar: $60,000. The difference is significant, and many buyers don't see it coming.

Important: these rules apply only if you live in one of the units. If you're buying a plex purely as an investment without residing there, the minimum down payment rises to 20% and the loan cannot be insured.

One of the advantages of a multiplex is that rental income from the other units can improve your mortgage qualification. But lenders don't count 100% of that income. Each institution has its own rules, and this is where having a broker becomes critical.

As a general rule, lenders include between 50% and 80% of gross rental income in their calculation of your total income. This percentage accounts for vacancy risk, maintenance costs, and periods without a tenant.

In practical terms, if two units in a triplex each generate $1,200 per month, for a total of $2,400, the lender might only count $1,200 to $1,920 in their calculations. That's still significant for your qualification, but it's not the full gross amount.

It's also worth knowing that for properties with 1 to 4 units where the owner resides, lenders can use two different calculation methods: the rental income method or the property cost method. Your broker compares both to identify which approach maximizes your chances of approval.

For properties with 1 to 4 units and a down payment under 20%, CMHC mortgage insurance applies. But premiums are calculated differently depending on the number of units and whether the property is owner-occupied.

For an owner-occupied duplex or triplex, the premium applies to the full loan amount, similar to a single-family home. But premium rates can vary. It's important to ask your broker to calculate the exact cost of this insurance for your specific scenario, since it gets added to the mortgage balance and generates interest over the full term.

Yannick wanted to buy a triplex. His budget was based on a 5% down payment, the same as for a single-family home. When his broker walked him through the rules, he realized he was short $30,000 to reach the required 10%.

Two options emerged: wait until he had saved the necessary down payment, or reconsider a duplex, where the 5% rule still applied.

After a full analysis with his broker, Yannick opted for the duplex. The rental income from a single additional unit already covered 40% of his monthly mortgage payment. And in two years, with the equity accumulated, he could consider purchasing a second property.

What surprised him most? That his broker ran the numbers in both directions: not only to see whether he qualified, but to make sure the investment actually made financial sense over five years.

Before falling in love with a plex and signing an offer to purchase, here's what your broker should validate with you:

That last point is often overlooked. In Quebec, tenant rights are strong. If a tenant occupies the unit you plan to live in, the process to regain possession can take time. Your broker and notary need to be fully informed before anything is signed.

Buying a plex is both a real estate purchase and a business project. The mortgage component is just one piece of the picture, but it's often the one that determines whether the project is viable or not.

A broker who knows multiplex financing well can make the difference between a declined file and an approved one, simply by choosing the right lender, the right calculation method, and the right product for your situation.

 

Are you considering buying a duplex or triplex? Talk to us before making an offer. We'll walk through the full financial picture with you, rental income included.