Can You Fully Finance an Investment Property?

Can You Fully Finance an Investment Property? Can you buy an investment property without bringing your own down payment? Sometimes. But there is a big difference between what is technically possible and what is actually smart. In today's episode of the Canadian Real Estate Investing Morning Show, Wayne and Gabby answer a listener question about borrowing the down payment for an investment property, using home equity, private lenders and seller financing. The biggest takeaway is simple: You can sometimes borrow the money — but the source of that money, the cost of that money and the risk you are taking matter enormously. 🧠 What You'll Learn Why traditional lenders generally require investors to bring their own down payment What 80% loan-to-value actually means Why lenders want borrowers to have "skin in the game" When higher loan-to-value financing may be available for a principal residence Why investment properties are treated differently How home equity can be used toward the down payment on another property Why a HELOC is very different from an unsecured line of credit How moving equity from one property into another can help investors scale Why borrowing 100% of a rental property through private financing can become extremely expensive When private financing may make more sense for short-term investments What seller financing is How vendor take-back mortgages, lease options and agreements for sale can work Why seller financing is an advanced strategy How Wayne and Gabby used seller financing to build their own portfolio Why zero-money-down deals can still create significant long-term risk How one of their seller-financed properties has generated approximately $160,000 to date Why balancing leverage with strong cash flow matters Why the most aggressive strategy is not always the best strategy Why Banks Usually Want 20% Down For a typical investment property, major lenders generally work around an 80% loan-to-value limit. That means if you are buying a $500,000 property, the lender may finance approximately: $400,000 The remaining: $100,000 needs to come from an acceptable down-payment source. Lenders want the borrower to have some financial exposure in the deal. If the investor has no money at risk, the lender may reasonably worry that it becomes much easier for that borrower to simply walk away if the investment starts going badly. That is why the source of the down payment matters. What About 5% Down? Higher loan-to-value mortgages can be available in certain circumstances for an owner-occupied principal residence. That is different from buying a traditional rental property. Wayne also gives an important warning in this section: Do not misrepresent an investment property as your principal residence in order to qualify for financing you would otherwise not receive. That can cross into mortgage fraud. Can You Borrow the Down Payment? Yes — under the right circumstances. One of the most practical examples discussed in the episode is using equity from a property you already own. Imagine your home is worth: $500,000 And you owe: $250,000 If a lender is willing to lend against the property up to 80% of its value, that would be approximately: $400,000 Since you already owe $250,000, there may be approximately: $150,000 of accessible borrowing room, subject to qualification and the lender's requirements. That equity can potentially be accessed through a home equity line of credit and used toward the down payment on another property. The important distinction is that the new debt is secured against existing equity. You are effectively moving some equity from one property into another. You Are Not Creating Equity Out of Thin Air Wayne walks through the concept visually during the episode. If you have $250,000 of equity in one property and borrow $100,000 or $150,000 against it to purchase another property, your equity in the original property goes down. But you now have equity in the new property. The money did not magically appear. It moved. The potential advantage is that you now own two assets instead of one. If both properties appreciate, both mortgages are paid down over time and the rental property produces cash flow, you have created more opportunities for your net worth to grow. But that only works if the property you buy actually makes sense. Do Not Borrow Against Your Home for a Bad Investment Wayne is very clear on this point. Using home equity can be a powerful tool. It can also be a terrible idea if you use that money to buy an investment that depends on speculation, excessive leverage or appreciation just to survive. The fact that financing is available does not mean the investment is good. The property still needs to produce strong enough economics to justify the risk. What About Private Lenders? Private lenders operate differently from major banks. They can create their own lending criteria and may be willing to finance deals that traditional lenders would not. Some may provide higher loan-to-value financing or permit borrowers to obtain the remainder of the capital from another source. The problem is: You pay for that flexibility. Wayne uses an extreme example of a $500,000 property financed around 15% interest. At 15% interest, the annual interest alone would be: $75,000 That works out to approximately: $6,250 per month in interest before property taxes, insurance, repairs, vacancy or any other expenses. For a long-term rental property, those numbers become very difficult to justify. Private Financing Can Have a Place Wayne does not say private lending is always bad. For a short-term strategy such as a fix and flip, higher-cost financing may sometimes be acceptable if the investor has enough margin in the deal. If you borrow expensive money for three to six months, renovate the property, create substantial equity and sell it, the carrying cost can potentially be absorbed into the project. That is very different from trying to operate a long-term rental property indefinitely with extremely expensive debt. Seller Financing The other major option discussed is seller financing. Instead of the bank providing all of the financing, the seller may agree to finance part or potentially all of the purchase. Seller-financing structures can include strategies such as: Vendor take-back mortgages Agreements for sale Lease options Other negotiated seller-financing arrangements These can create opportunities where the buyer does not need a traditional down payment. But Wayne emphasizes that these are advanced strategies. The contracts, protections, risks and responsibilities matter. It is not something he recommends learning from a five-minute social media explanation. How Wayne and Gabby Built Their Portfolio Seller financing played an important role in Wayne and Gabby's early portfolio growth. At the time, raising capital was more difficult and social media did not provide the same opportunities to build an audience and attract investment partners. So they learned how to structure deals directly with sellers. They acquired properties where the seller financed the purchase, in some cases allowing Wayne and Gabby to buy with none of their own money invested into the acquisition. A Zero-Money-Down Property That Has Made $160,000 Wayne shares an example of one property they acquired using seller financing in approximately 2017. They invested: $0 of their own money into the deal. The seller financed the property. Today, Wayne says the property cash flows approximately: $400 per month And has generated approximately: $160,000 in total profit/equity to date. He estimates they may be around $200,000 ahead by the time the property is eventually sold. That demonstrates the potential of seller financing when it is done properly. But Zero Money Down Does Not Mean Zero Risk This is where Wayne adds an important warning. Just because a strategy produces an incredible return on the amount of cash invested does not mean you should fill your entire portfolio with highly leveraged deals. Wayne and Gabby deliberately moved toward building a portfolio with stronger cash flow and a more balanced debt structure over time. Why? Because eventually something goes wrong. Interest rates rise. Vacancies happen. Properties flood. Expenses increase. A pandemic arrives. An investor needs enough margin in the portfolio to survive. The Main Lesson Can you fully finance an investment property? Yes, there are ways. You may be able to: Access equity from another property Use secured borrowing for the down payment Work with a private lender Negotiate seller financing But every additional layer of leverage introduces risk. The objective should not be: "How can I buy as many properties as possible with no money?" The better question is: "How can I structure this investment so that it produces strong returns while still giving me enough margin to survive when something goes wrong?" Financing can help you scale. It should not become the reason the investment fails. 👥 About Your Hosts Wayne and Gabby Hillier are full-time Canadian real estate investors, entrepreneurs and founders of REI Masters. Through the Canadian Real Estate Investing Morning Show, they share practical lessons from buying, financing, operating and managing rental properties across Alberta. 💡 Resources & Contact Send Your Questions to the Show Have a question about financing, down payments, seller financing, rental properties or building your portfolio? 📧 [email protected] Join the REI Masters Mentorship Program Work directly with Wayne and Gabby on acquisitions, financing, seller-financing strategies, deal analysis, cash flow, risk management and portfolio growth. 🌐 www.reimasters.ca Get The 5% Rule™ Learn Wayne Hillier's framework for evaluating rental-property cash flow and reducing investment risk. Search The 5% Rule by Wayne Hillier on Amazon. Watch the Show Live Join Wayne and Gabby every weekday morning at 7:00 AM Mountain Time on YouTube. Follow Wayne Hillier – Real Estate Investing Coach on YouTube. 📅 Upcoming Events REIcon – The Summit Series Edmonton, Alberta September 11–13, 2026 Wayne and Gabby will be presenting on real estate investing, due diligence, property management and asset management. Calvin Hexter from Calvin Realty joins tomorrow's Morning Show to discuss the Edmonton real estate market and the upcoming Summit Series event. 🌐 reiconference.ca REI Masters Annual Retreat Edmonton, Alberta October 17–18, 2026 The annual REI Masters mentorship retreat brings the community together to build investing roadmaps, work on long-term goals and strengthen the relationships within the mentorship community. 🌐 www.reimasters.ca 🤝 Sponsors Calvin Realty – Edmonton Investor-Focused Realtor Team 🌐 www.calvinrealty.ca Finngo Bookkeeping & Tax Specialized bookkeeping and tax services for Canadian real estate investors. 🌐 www.finngo.com/rei Kirkwood & Brennan Mortgage Group Investor-focused mortgage planning for Canadian real estate investors. 🌐 www.kbmortgages.ca 📧 [email protected]