Correct.... it is how I have helped many friends and clients own a investment property. As long as you are moving into the next one you can put 5% down. The biggest hurdle one will face is if they maxed out their borrowing power on the first home. Your debt to service ratio will include the previous property when trying to qualify for another however you can use up to 100% of your rental income on that place (assuming you have a lease signed) to offset much of it.
Seeing as you are looking at downsizing, you will have a much better chance at holding both places. Moving up is where it gets tougher on the same income as when you originally purchased.
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