Commercial Mortgage in Canada (2026): How It Works

Whether you're buying a retail unit, an office, an industrial bay, an apartment building, or a mixed-use property, a commercial mortgage is a different animal from a home loan. The property's ability to generate income — not just your personal finances — drives the decision. Here's how commercial mortgages work in Canada in 2026.

The short answer

A commercial mortgage finances income-producing or business property and is underwritten primarily on the property's cash flow, measured by the debt-service coverage ratio (DSCR). Expect larger down payments (commonly 25–35%), shorter terms with longer amortizations, and more documentation than a residential deal. The property's net operating income is the star of the file. See commercial mortgage options.

What counts as commercial

• Multi-residential — apartment buildings with 5+ units (see multi-unit financing).
• Retail and office — storefronts, plazas, office space.
• Industrial — warehouses, manufacturing, flex space.
• Mixed-use — residential over commercial.
• Special-purpose — hotels, gas stations, self-storage, and more.

How lenders underwrite it

The key metric is the debt-service coverage ratio (DSCR) — the property's net operating income divided by its debt payments. Lenders typically want a DSCR around 1.20–1.25 or higher, meaning the property earns at least 20–25% more than its mortgage costs. They also weigh the property type and condition, the strength and length of leases, the location, and your experience and net worth as the borrower. Use the commercial mortgage calculator to model payments.

Down payment, terms, and rates

• Down payment: commonly 25–35% (less for CMHC-insured multi-residential).
• Amortization: often 20–25 years, sometimes longer for strong multi-residential.
• Term: frequently shorter (1–5 years) than the amortization.
• Rates: priced to the deal's risk — property type, lease quality, and DSCR all matter.

What you'll need

Commercial files are document-heavy: the property's income and expense statements (or pro forma), rent roll and leases, an appraisal, an environmental assessment for certain property types, your financial statements and net worth, and a business plan for owner-occupied or value-add deals. Good preparation speeds everything up.

Owner-occupied vs. investment

If your business will occupy the building, lenders consider your business's financials alongside the property — sometimes allowing better terms than a pure investment. If it's an investment, the property's third-party income is the focus. Either way, financing larger or specialized assets often blends commercial lending with private bridge financing for value-add phases — see private mortgages.

Frequently asked questions

How much down payment do I need for a commercial mortgage?

Commonly 25–35%, though CMHC-insured multi-residential can require less. The exact figure depends on property type, income, and lender.

What is the debt-service coverage ratio (DSCR)?

The property's net operating income divided by its mortgage payments. Lenders typically want around 1.20–1.25+, meaning the property earns comfortably more than its debt costs.

Are commercial mortgage rates higher than residential?

Usually somewhat, because they're priced to the deal's risk — property type, lease strength, and DSCR. Strong, well-leased properties get better pricing.

Can I get a commercial mortgage for an apartment building?

Yes — 5+ unit buildings are financed commercially, and CMHC multi-family insurance can offer attractive rates and higher leverage for qualifying purpose-built rentals.

Financing a commercial property? Talk to us — we'll package the income story lenders want and find the right fit across our commercial network. Explore commercial options.