Commercial Mortgage in Canada: How Private Lenders Decide (2026)

Commercial property financing covers anything a bank will not treat as a home. That includes multi-unit residential buildings with five or more units, retail plazas, industrial and warehouse space, office buildings, mixed-use property with storefronts below and apartments above, and special purpose assets like self-storage, gas stations and care homes.

The regulatory line matters more than most buyers expect. OSFI Guideline B-20 sets underwriting expectations for residential mortgages on one to four unit dwellings and for home equity lines of credit at federally regulated lenders. Commercial property sits outside it. There is no consumer stress test on a plaza. If you are still sorting out where each lender tier fits, our breakdown of A lenders, B lenders and private lenders maps the same hierarchy on the residential side. The building itself has to prove it can pay for itself.

Two files can look identical on paper and still be read completely differently:

• Owner-occupied: your business operates from the building, so lenders read your company financials alongside a market rent estimate for the space you use.
• Investment: tenants pay the rent, so lenders read the leases, the rent roll, the vacancy history and your track record as a landlord.

Multi-unit residential is its own category again. CMHC insures financing on buildings with five or more units, and insured files are underwritten to a different standard than conventional commercial ones. Rate context helps here too. The Bank of Canada has held its policy rate at 2.25% through the first half of 2026, which has steadied fixed pricing after two unsettled years.

Call it the 4-Number Commercial File Test. Nearly every commercial decision in Canada comes back to these four, roughly in this order.

1. Debt service coverage ratio

DSCR is net operating income divided by annual debt service. Net operating income is gross rent minus a vacancy allowance minus operating expenses, calculated before any mortgage payment. A ratio of 1.25x means the building produces 25% more income than the mortgage costs to carry. Conventional lenders commonly want 1.20x to 1.25x, banks often test it at a rate above the one you are actually paying, and CMHC-insured multi-unit programs can accept as low as 1.10x on top-scoring applications. This is the commercial cousin of the GDS and TDS ratios used on residential files, except the building is the borrower.

2. Loan to value

Conventional commercial financing usually lands between 65% and 75% of appraised value, which is why the down payment conversation starts at 25% to 35%. Alternative lenders read the equity position more heavily than the coverage ratio, so a thinner income year is workable when the loan-to-value sits at a conservative level. The same logic drives how much equity a private mortgage needs on residential property.

3. Lease and tenant quality

A building at 95% occupancy with a single tenant is riskier than the same building at 85% with six. Underwriters read remaining lease terms against the amortization you are asking for. If your anchor tenant has 14 months left and you want a five year term, expect that to come up early.

4. Sponsor strength

Net worth, liquidity remaining after closing, and experience with this asset class. Commercial lenders want proof you can absorb a vacancy or a roof replacement without the mortgage going sideways. That is a different question from whether you pay your Visa on time.

Solid Capital sits in that bottom row. Our commercial mortgage files are read equity first, which is why a sound building with one messy income year is still a real conversation rather than an automatic no.

Commercial underwriting is document-heavy, and the complete file gets read first. Pull these together before anyone touches your credit.

1. The purchase and sale agreement, or your current mortgage statement if you are refinancing
2. A rent roll listing every unit, tenant, square footage, monthly rent, and lease start and end dates
3. Copies of the leases themselves, including amendments, renewals and any side agreements
4. Two years of property operating statements, plus a current year-to-date
5. Business financial statements if you occupy the building, plus Canada Revenue Agency notices of assessment for each guarantor
6. A personal net worth statement and proof of the liquidity you will still hold after closing
7. Property tax statements, current insurance certificates, and written zoning confirmation
8. A commercial appraisal, plus a Phase I environmental assessment on industrial sites or former fuel locations

Honestly, the thing that stalls commercial files most often is not the coverage ratio. It is a rent roll nobody reconciled against the signed leases. Underwriters check them line by line, and one unit showing $2,400 on the rent roll and $1,950 in the lease will freeze the file for a week while every income figure gets re-verified.

Order the appraisal and the environmental report early, because they run on their own timelines and no lender can compress them. If you want to see how the stages fit together on our side, our process page lays out each step in order.

Declines cluster around a short list of problems, and most are fixable with better structure rather than a different building.

Where commercial files break

• Coverage below 1.0x, meaning the property cannot yet carry its own mortgage
• One tenant supplying most of the income, or a vacancy the seller disclosed vaguely
• Special purpose property that would be difficult to re-tenant after a default
• Remaining lease terms shorter than the mortgage term you requested
• Tax arrears or a lien registered against title, which usually has to be cleared or financed first (see financing a CRA tax debt payoff)
• An environmental flag on an industrial or former fuel site
• A closing date the seller refuses to push past 30 days

That last one is a financing problem rather than a property problem, and it kills more good deals than weak numbers do. Banks are not built to close a commercial file in three weeks. Alternative lenders are, and bridge financing exists precisely for this gap.

The structure that usually works

The fix is almost always the same shape: a shorter term first mortgage from an alternative lender so you close on schedule, twelve to twenty-four months to stabilize the income and fix the coverage, then a refinance into bank pricing once the numbers support it. That is a plan with a defined exit, not a permanent arrangement. Read our guide on how to exit a private mortgage before you sign anything with a term attached.

Solid Capital is a Canadian alternative lender for business owners and property investors that big banks decline or under-serve. We underwrite the full file, meaning the building, the leases, the equity position and the business behind it, rather than stopping at a credit score. If your building is sound and your closing date is tight, talk to a Solid Capital advisor. Five minutes to apply, no impact to your credit, and a Canadian advisor reviews every file personally.

A bank reads the file it wants to see. An alternative lender reads the file you actually have. Same building. Different answer.

What is the minimum down payment for a commercial mortgage in Canada?

Conventional commercial financing generally caps between 65% and 75% of appraised value, so plan on 25% to 35% down. Insured multi-unit programs through CMHC allow a higher loan-to-value, and alternative lenders set their limit by property type and equity position rather than a fixed table.

Do commercial mortgages have a stress test in Canada?

No. The OSFI minimum qualifying rate applies to residential mortgages on one to four unit dwellings and to home equity lines of credit at federally regulated lenders. Commercial files are tested on the property's debt service coverage instead, though banks commonly apply their own internal rate cushion.

What DSCR do Canadian commercial lenders require?

Most conventional lenders look for 1.20x to 1.25x, meaning the building's net operating income exceeds its annual mortgage payments by 20% to 25%. CMHC-insured multi-unit files can qualify as low as 1.10x on top-scoring applications, and alternative lenders weigh the equity position more heavily than the ratio.

How long does a commercial mortgage take to close in Canada?

Bank and credit union files commonly run several weeks once the appraisal and environmental work are ordered, and insured multi-unit deals can take months. Alternative lenders move faster, and in many cases a complete file funds in days rather than weeks.

Can you get a commercial mortgage with bruised credit?

In many cases, yes. Commercial underwriting starts with the property income and the equity position, so a strong building can carry a borrower whose personal credit has taken damage. Expect a tighter loan-to-value limit and a shorter term on those approved files.

What is the difference between a commercial mortgage and a private mortgage?

A commercial mortgage is defined by what secures it, meaning business or income-producing property rather than a home. A private mortgage is defined by who funds it, meaning a lender outside the banking system. A commercial mortgage from an alternative lender is both at the same time.