A buyer in Halifax obtains a standard high-ratio insured mortgage for $380,000 on a $400,000 purchase. Two years later, they decide to buy a second property as a rental and want to keep their existing primary residence. What is a key restriction typically imposed by default insurers (like CMHC, Sagen, Canada Guaranty) when someone owns multiple residential properties?

Question: A buyer in Halifax obtains a standard high-ratio insured mortgage for $380,000 on a $400,000 purchase. Two years later, they decide to buy a second property as a rental and want to keep their existing primary residence. What is a key restriction typically imposed by default insurers (like CMHC, Sagen, Canada Guaranty) when someone owns multiple residential properties?

Answer options:

• The amortization period on the new rental property will be capped at 15 years.
• They will no longer qualify for an insured mortgage on their primary residence or any subsequent property. ✅ They are limited to a maximum of 4 insurable properties overall, and the LTV for additional properties after the first will be capped at 80%.
• The stress test qualifying rate will be 2% higher for any subsequent properties.

Correct answer: They are limited to a maximum of 4 insurable properties overall, and the LTV for additional properties after the first will be capped at 80%.

Explanation: Default insurers generally limit the total number of financed residential properties an individual can have insured (typically up to 4). For investment properties beyond the first owner-occupied or first investment, the maximum LTV for insured mortgages is commonly capped at 80%, requiring a minimum 20% down payment.