Thinking About a Commercial Mortgage? Here’s What You Need to Know (and Ask!)

Edith Parinas
Nov 12, 2025
3 min read

For many Canadians, homeownership is just the beginning of their real estate journey. Whether you're growing a business, building passive income through rental units, or diving into real estate investment, a commercial mortgage might be your next big move.

But this isn’t your typical mortgage. Commercial financing comes with its own set of rules, requirements, and opportunities. Let’s break it down.

🏢 What Is a Commercial Mortgage?

A commercial mortgage is a loan used to purchase (or refinance) income-generating or business-use properties. These can include:

Multi-unit residential buildings (usually 5+ units)
Retail plazas
Office buildings
Warehouses and industrial spaces
Mixed-use properties (commercial + residential)
Raw land for commercial development

Unlike a residential mortgage — which is typically assessed based on you — commercial mortgages are assessed based on the property’s income potential and the business structure behind it.

💼 Who Needs a Commercial Mortgage?

You might be ready for a commercial mortgage if you’re:

A business owner buying a location for your operations
A real estate investor scaling beyond small residential properties
Purchasing a rental property with more than 4 units
Leasing out a commercial space to generate passive income
A builder/developer starting a new project

📊 How Are Commercial Mortgages Evaluated?

Here’s where it gets a little more technical — and why working with a mortgage professional (hi, that’s me!) is essential.

Lenders look at a few key factors:

Property IncomeThey’ll assess the Net Operating Income (NOI) — rent minus expenses — to see if the property can cover the mortgage payments.
Debt Service Coverage Ratio (DSCR)Most lenders require a DSCR of 1.20 to 1.40. This means the property should earn 20–40% more than the cost of the mortgage.
Down Payment RequirementsCommercial mortgages typically require 25%–35% down, depending on the property type and risk level.
Your Business FinancialsYou’ll need to show 2–3 years of financials, tax returns, and sometimes a business plan — especially if you're an entrepreneur or buying through a corporation.
Credit & ExperienceYour creditworthiness still matters — especially if you’re a new investor. Lenders also want to know if you have experience managing similar properties.

🧾 Documents You’ll Likely Need:

Business financial statements
Personal and business tax returns
Rent roll and lease agreements (if applicable)
Property appraisal
Business plan or forecast (sometimes required)
Articles of Incorporation (if applying under a corporation)

💡 Pro Tip: Consider Pre-Approval Before You Shop

Commercial deals move quickly — and sellers take serious buyers seriously. Getting pre-approved gives you a budget, strengthens your offer, and makes the entire process smoother.

🔄 Refinancing a Commercial Property?

You can also use a commercial mortgage to refinance an existing property — to access equity for renovations, expansion, or purchasing another investment.

Just know: refinancing often comes with stricter lending rules and a new appraisal.

🌟 So, Is Commercial Right for You?

It depends on your goals, your risk tolerance, and your financial foundation. The opportunities can be huge — but so can the hurdles if you’re not prepared.

That’s where I come in. I’ll help you:

Understand your financing options
Compare lenders and terms
Build a strategy that aligns with your long-term plan

🧘‍♀️ Let’s Take the Stress Out of It

Yes, commercial mortgages are more complex — but with the right guidance, they don’t have to be overwhelming. I’m here to walk you through every step, every term sheet, and every “what does this mean?” moment.

📩 Ready to talk commercial strategy? Let’s set up a chat and map out your next move.