A commercial building is financed on its own numbers. Net income, real expenses, and the ability to cover the debt come before your personal situation.
Down payments are higher, timelines run into weeks, and the appraisal and environmental review are incurred before approval. We plan for that from the start.
Discuss my commercial financingThe sale sheet figures are almost always optimistic: projected rather than actual rents, trimmed expenses, no vacancy allowance. I start from signed leases and financial statements to establish net income the lender will accept.
In commercial lending, appetite varies enormously with building type, use, location, and lease quality. A building refused by one institution can be financed elsewhere on sound terms. I present the file, built and documented, to the lenders whose criteria fit, rather than letting one refusal define what’s possible.
Leases, rent roll, operating expenses, and financial statements over several years.
With a vacancy allowance and real expenses, to calculate the debt coverage ratio.
Commercial financing is negotiated case by case; I go to those whose appetite matches this building type.
Appraisal, environmental review where the use requires it, lease verification, then coordination through to signing.
Appraisal, environmental review, lease verification, and underwriting are all done case by case, often over several weeks. A financing condition written with residential-style deadlines won’t hold here: plan for it in the offer itself.
Professional appraisal, environmental review, lender underwriting fees: these are paid during the review, so partly at risk if the financing doesn’t complete. They belong in the project budget, not as an unexpected extra.
Commercial financing works differently from residential. Depending on the structure and the lender, brokerage fees may apply, on top of the lender’s underwriting fees, the appraisal, and legal costs. What it costs, in detail
An income property is judged on verifiable numbers: signed leases, real expenses, and a vacancy allowance.
In Quebec, a building of six units or more is generally underwritten as commercial rather than residential. Below that, it usually stays residential, with different rules and down payments. That boundary changes the file considerably.
It compares the building’s net income with the annual loan payment. The lender requires a margin: net income must exceed the payment, not merely match it. It is the central figure in the decision, ahead of your personal situation.
Substantially higher than residential, and variable with the building type, its use, and the quality of the income. A single-tenant building, a specialized business, or an aging structure requires more. The lender sets its requirement after reviewing the file.
Yes, secondarily. The building must first stand on its own numbers. Your net worth, management experience, and other properties then serve as supporting strength and can improve the terms offered.
Yes, but the split between commercial and residential portions affects the treatment and sometimes the type of lender. A commercial ground floor under apartments is assessed differently depending on whether commercial occupies a third or two-thirds of the area.
Major banks, credit unions, and specialized lenders each apply their own criteria, products, and terms. A logo does not mean that a mortgage will be offered or approved.
