Mortgage Solutions · Commercial
Apartment buildings, mixed-use, retail, industrial, land: commercial financing plays by completely different rules. The lender weighs the building's income as heavily as your own. Net operating income and debt-service coverage drive the deal.
▍ Debt-service coverage calculator
DSCR is annual net operating income divided by annual mortgage payment. Most lenders want 1.20–1.30 minimum, meaning the property earns 20–30% more than the debt costs. Set the income and loan, and watch coverage move.
An illustration only. Lenders normalize expenses, apply a vacancy allowance, and stress the rate before quoting. We run the property as a full financial model so there are no surprises at underwriting.
At 1.30 the property comfortably covers the debt, so most lenders will quote on a deal like this.
Whenever residential rules don't apply
A commercial mortgage is a loan against any property that isn't a primary residence with fewer than four units. Anything else is commercial territory.
Apartment buildings with five or more units. CMHC-insured options exist here, which can dramatically lower the cost.
Buildings with both residential and commercial space, like a main-street storefront with apartments above.
Retail, office, industrial, warehouse: income property leased to business tenants.
Your business buys its own building, often the cheapest commercial debt available, because the bank gets the banking relationship too.
Raw or serviced land for a residential or commercial build.
Any investment property purchase above the four-unit residential threshold.
How much, and what it costs
They depend on property type, borrower strength, and whether the deal is insured. Every box has a different lender appetite, and knowing which saves weeks.
| Deal type | Typical LTV | Typical rate | Notes |
|---|---|---|---|
| CMHC-insured multi-res (5+) | Up to 85% | Prime + 0.5–1.5% | Long amortizations (up to 40 yrs); cheapest commercial debt available. |
| Conventional multi-res | Up to 75% | Prime + 1–2.5% | No insurance premium; faster underwriting. |
| Mixed-use | Up to 70% | Prime + 1.5–3% | Lender weights the residential vs commercial component. |
| Pure commercial retail / office / industrial | 60–75% | Prime + 2–4% | Strong tenants and DSCR drive better terms. |
| Owner-occupied | Up to 75% | Prime + 1–2% | Best pricing, since the bank wants the business too. |
| Land / development | 50–65% | 8–12% (often private) | Riskiest; the rate reflects construction or zoning timeline. |
Commercial files almost always charge a commitment fee (0.5–1%) and lender fee (0–1.5%), plus appraisal, Phase I environmental, legal, and broker fees. Total closing costs run 2–4% of the loan amount, much higher than residential.
Deals live or die on the story
Pro-forma NOI, normalized expenses, vacancy assumptions, DSCR at the rate you're being quoted. Lenders want to see this before they quote, not at the end.
Different lenders have different boxes: one will love a six-unit purpose-built in midtown, another won't look at anything under 12 units. Knowing the box saves weeks.
The insurance premium (typically 2–4% of loan) buys longer amortization and a lower rate. We model both and recommend the cheapest all-in.
Phase I environmental, appraisal, building condition report. Ordering the wrong vendor, or in the wrong order, delays funding by weeks.
Investors building a portfolio need to keep credit capacity available for the next deal. We avoid covenants and personal guarantees that lock you out of future financing.
Short-term private financing on commercial property is alive and well, and we have lenders who fund in two weeks for the right deal.
No commitment to start. Send us the property type and the income, and we'll model the DSCR and tell you which lenders will quote.
Common questions
Tell us about your situation. We'll match you to the right product and lender.
Start pre-approvalAI assistant · General information