Can I Use Home Equity as a Down Payment? Here’s What Ontario Homeowners Should Know

If you’re a homeowner in Ontario and you’re considering buying a second property—whether it’s a rental, vacation home, or even helping a family member—you might be asking: can I use home equity as a down payment?

It’s a smart question. And in many cases, the answer is yes.

At Tribecca, we help homeowners across the GTA and surrounding areas unlock the value in their homes to fund new opportunities. Whether you’re eyeing an investment property, supporting your child’s first home purchase, or planning for a vacation home, here’s how using home equity for a down payment works—and what you’ll want to consider along the way.

Yes, you can use the equity in your home to help fund a down payment—provided you have enough equity built up and can qualify for a new mortgage on the second property. This is a common strategy for buyers who want to invest in real estate but don’t want to drain savings or take on an unsecured personal loan.

You can access your home equity in one of two ways:

• A home equity loan, which gives you a one-time lump sum to use toward the purchase price of your second property
• A home equity line of credit (HELOC), which offers  access to funds via a revolving credit structure, also known as an equity line of credit

Our specialty is home equity loans, which have a more flexible approval process, and allow you to access a larger dollar amount of your equity.  

Even if you’ve paid down a portion of your existing mortgage, that doesn’t automatically guarantee approval. A mortgage lender—whether it’s a bank or an alternative lender like Tribecca—will still look at several factors:

• How much equity you have (usually you need 20% or more of your home’s value available)
• Your  income and ability to manage monthly payments on a new mortgage

At Tribecca, we have a common sense approach to lending and our guidelines are more flexible than the banks. 

Using a home equity loan to fund a second property can be a powerful tool when used wisely. Instead of tying up cash or taking out high-interest personal loans to borrow money, you’re leveraging a low-cost source of capital you already own.

If you’re purchasing a rental property, the rental income may help offset the new mortgage payments, improving your cash flow and long-term ROI. And if you’re buying a vacation home, it may serve as both a lifestyle asset and a future investment.

But it’s not a one-size-fits-all decision. Tapping into your home’s equity reduces the cushion you have on your primary residence, and it adds a layer of financial responsibility that should align with your broader personal finance goals.

That’s why we encourage you to look at the full picture—your income, your existing debts, and your future plans—before making the leap.

We’ve been helping Ontario homeowners make smarter borrowing decisions for more than 25  years. As a direct lender, we offer flexible financing options that go beyond the rigid checklists of traditional banks.

We work with people who are self-employed, who earn income outside of a traditional job, or who’ve built equity but don’t have time to wait on slow approvals. Whether you need a home equity loan or a more creative lending solution, our team will help you figure out what’s possible—and walk with you every step of the way.